On Thursday came more signals from News Corp. that Hulu will charge for at least some of its films and TV shows.
Chase Carey, News Corp.'s deputy chairman, suggested in comments he made at the OnScreen Media Summit that it's just a matter of time before Hulu, the video service founded by News Corp. and NBC Universal, launches a subscription service.
"I think a free model is a very difficult way to capture the value of our content," Carey said, according to a report Broadcasting & Cable, which co-hosted the conference. "I think what we need to do is deliver that content to consumers in a way where they will appreciate the value...Hulu concurs with (the notion) that it needs to evolve to have a meaningful subscription model as part of its business."
Asked when Hulu would roll out its pay model, Carey, who has been to only one News Corp. board meeting since his recent arrival at the company, was less sure. According to Broadcasting & Cable, Carey thought the move would likely be made in 2010. He acknowledged however, that no timeline had been set.
Carey's comments follow similar statements made by other News Corp. decision makers, including Rupert Murdoch, the company's chairman. Murdoch has talked about charging for content at the online units of many of his media properties, including The Wall Street Journal.
If Hulu charges, it's a big deal. The video site, which offers full-length TV shows from NBC Universal, Twentieth Century Fox Film, and other top entertainment companies, is a pioneer. It's the first online ad-supported video service to successfully offer long-form content. If it retreats from the ad-supported model, then what consumers get is the cable business model transplanted on the Web.
And charging for content online may not solve Hulu's revenue problems. Subscription video-on-demand services have to compete with a score of sites that offer pirated content free of charge.
The reason that Hulu is considering a pay wall is presumably because the site isn't generating the kind of money the studios have grown accustomed to. Advertising experts have said that it's not possible to insert enough ads without ruining the viewing experience on one end and on the other, it's not possible right now to obtain the kind of ad rate that will generate big money.
It's interesting to note that while News Corp. appears to be dissatisfied with the ad-supported model, Sony Pictures Entertainment appears to be doubling down on ad-supported Crackle.
There isn't another major studio distributing as many full-length feature films online on an ad-supported basis than Sony Pictures. In February, Crackle began offering catalog film titles from its vast library on Crackle. Recently, "Taxidriver" made its ad-supported Internet debut.
Since Sony Pictures relaunched Crackle--formerly a user-generated video service--in February, the site's premium monthly streams have grown to nearly 10 million, 27 percent of which were in the site's core demographic (men, ages 18 to 34), according to statistics provided by ComScore. Time spent on Crackle has increased sevenfold in that period, to 13.4 minutes per unique session. In the core demographic, that number rises to 16.7 minutes.
Here's another benefit that Crackle offers Sony: the site will post premium films when they aren't under contract to a cable or broadcast TV station. Before Crackle came along, movies like "Taxidriver" would gather dust during the periods when they weren't being aired.
We don't know what kind of money is being made by Hulu or Crackle, but regardless of whether Hulu charges for its content, there is still hope for ad-supported movies and TV shows on the Internet.
Crackle, the video site owned by Sony Pictures Entertainment, has expanded its feature film lineup, which means that you can now watch "Groundhog Day" or "Spider-Man 2" at the office, if your boss isn't looking.
Crackle now hosts "nearly 100" full-length features, according to a release, and "dozens more" are on the way. There's also a pop-culture trivia game called "Crackle Cinemactive."
What's not clear is whether these movies will soon be on their way to YouTube, where Sony is one of a number of content partners that will be bringing TV and movies to the Google-owned video-sharing site. YouTube has agreed to use a Crackle player when showing Sony content, and Crackle will get a cut of the ad revenue.
Sony launched Crackle two years ago, a year after it acquired video site Grouper for $65 million. Unlike bigger video hub Hulu, a joint venture between NBC Universal and News Corp., Crackle has a target audience: men ages 18 to 34. That's what Sony hopes will make it more advertiser-friendly.
"Our movie lineup is unmatched online," Eric Berger, Sony Pictures Television's senior vice president of digital content, said in a release. "These are the movies that matter for guys 18 to 34, and this is the next step in creating our direct-to-consumer network."
Move over Hotforwords, Lonelygirl15, and all the other YouTube stars. The video site is bringing in more professionally made content and plans to make it a marquee product.
Some of YouTube's most-watched contributors will get some competition from the likes of Sony Pictures.
(Credit: YouTube)The Internet's largest video site on Thursday announced that it has struck deals with a host of entertainment companies, including Sony Pictures, CBS (parent company of CNET News), Metro-Goldwyn-Mayer, Lionsgate, Starz, and the BBC, to acquire "thousands" of TV episodes and hundreds of films. The new content will only be available in the United States.
YouTube executives also said during a conference call that they have redesigned part of its Web site to create separate areas for professionally made content. On the site's front door will be two new tabs.
"The 'Shows' tab allows you to browse shows by genre, network, title and popularity," YouTube said in a statement. "The 'Subscriptions' tab will grant logged-in users one-click access to fresh content from their favorite creators."
At this point, it appears the most significant partnership is with Sony Pictures, one of the largest Hollywood film studios. The studio has agreed to post several full-length feature films and TV shows to YouTube. Some of the TV shows include, "Bewitched," and "Charlies Angels" and among the films are "Blue Lagoon," "Single White Female," and "Nowhere to Run." CNET reported earlier this month that the companies were in talks about a feature-film deal.
Representatives from Sony Pictures declined to comment.
Movies from Sony Pictures will only trickle on to YouTube, at least initially. YouTube has agreed to display the films using a video player from Crackle, Sony Pictures' own video site. The studio will control all the advertising for the films and Crackle will also get credit for the traffic.
Also on Thursday afternoon, Eric Schmidt, Google CEO, suggested during a conference call about the company's earnings that YouTube could someday charge fees.
"With respect to how it'll get monetized, our first priority is on the advertising side," Schmidt said. "We do expect over time to see micropayments and other forms of subscription models coming as well, but our initial focus is on advertising."
YouTube, acquired by Google in 2006, also announced it is launching a test version of Google TV Ads Online. Advertisers will be enabled to insert their advertisements into the ad breaks within TV shows displayed online. But to do this, advertisers must first enter bids for the shows it wants.
YouTube said pre-roll and post-roll ads may also be bid on.
While most of the TV shows and films YouTube acquired are at least several years old, the Sony news marks YouTube's most significant Hollywood deal yet. YouTube was once called a "rogue" by Viacom executives, who claimed in a 2007 lawsuit that the company encouraged the posting of unauthorized copies of its material to the site.
The feeling by many in Hollywood was that YouTube was hostile to content creators. But over the past year, Google and YouTube have made the service more attractive to big movie and TV companies. The site has upgraded the quality of its streaming video and began filtering content to eliminate pirated material.
Another concern was that the site offered no copy protections on its streams, according to film industry insiders. YouTube solved that problem with Sony Pictures at least, by using the studio's own video player.
Sony Pictures has acknowledged that it is discussing a deal to license feature films to Google's YouTube.
On Monday, CNET reported the two companies were discussing a deal that could help YouTube become an outlet for premium full-length content. Right now, YouTube offers mostly independent films and a handful of titles from Metro Goldwyn Mayer.
Sony Pictures wants to boost the profile of Crackle.com, the studio's own online video site, and a YouTube partnership could help promote the offering. Judging from other feature-film deals that Sony Pictures has cut with Hulu and others, Sony Pictures will likely not offer YouTube much more than a dozen films and will control advertising.
The studio also doesn't allow the syndication of its content, which means YouTube users won't be allowed to embed Sony Pictures content on their blogs or personal Web pages.
The biggest potential benefit for YouTube is that a successful partnership could attract other studios and TV networks.
Bloomberg first reported that Sony had confirmed talking to YouTube.
YouTube is in negotiations with Sony Pictures to get licensing rights to some of the studio's movies. 'The Professional' is from Sony Pictures and is available at Crackle.com.
(Credit: Crackle.com)YouTube is in talks to acquire licensing rights to full-length content from Sony Pictures, home of such films as "The International" and "Spider-Man," sources familiar with the negotiations told CNET News. Details about what a final agreement could look like are sparse, but any partnership between the two powerhouses would likely benefit both.
Representatives from both companies declined to comment.
Word of the negotiations comes a week after Disney announced it had licensed short-form content to YouTube. Those clips will come from a range of Disney brands, including ABC and ESPN. For YouTube, obtaining short-form clips from Disney is an important step but still doesn't provide what YouTube needs most.
Founded in 2005, YouTube made a name for itself by showcasing amateur-made snippets as well as hosting scores of illegally posted clips from the best TV shows and films. YouTube has done much to rid the site of pirated content, but the flip side is that most of the hot shows and films that generated big viewership are gone. At the same time, a host of Web video services are offering full-length films and TV episodes online. To compete, YouTube is trying to get access to the same premium content but has so far only acquired a handful of films from the archives of Metro-Goldwyn-Mayer.
Sony Pictures' Web video property, Crackle, could mean a major boost to YouTube's long-form hopes.
Is YouTube a movie channel?
YouTube is trying to become a player in Hollywood at a time when the online video sector is bursting with an increasing number of savvy and very watchable Web video services. YouTube, which did more than any company to create the online video sector, is at risk of falling behind when it comes to offering the kind of content most sought after by audiences as well as advertisers.
Hulu, the ad-supported video portal formed by News Corp. and NBC Universal, has become synonymous with long-form content. The service is easy to use and provides a high-quality viewing experience. Netflix's Web streaming requires a monthly subscription fee to access movies but can boast a much larger movie-library than Hulu. Netflix has also made the all-important jump from showing films on a PC to delivering streaming video to a TV, via set-top boxes, such as Roku and Xbox 360. Apple can offer mobility to those who download movies and TV shows to iPhones and iPods.
The cable companies are also talking up their own online-video plans. After decades of pumping money into Hollywood, the cable operators and premium movie channels could have an advantage when it comes to acquiring studio content.
Here's where Crackle and YouTube can help each other. Sony Pictures presumably wants to promote Crackle, so it needs to get in front of a large audience. YouTube needs popular movies and TV shows and that means striking deals with studio and networks willing to post long-form content on the Web. Not all of them are.
Some studio executives have told CNET that they don't believe full-length movies can make money online. To generate a decent return, a large number of ads must accompany a film. Tests show Internet viewers resent this, according to film-industry sources.
The good news is that at this early stage at least, managers at Sony Pictures' digital unit appear to believe in long-form Web video.
Sony Pictures embraces long-form Web video
Sony Pictures acquired Crackle for $65 million in 2006, shortly before Google paid $1.65 billion for YouTube. The site began as Grouper, a video-sharing site and YouTube rival. In July 2007, the studio swapped business models and names after it became obvious YouTube had locked up the video-sharing market.
A visit to Crackle shows Sony Pictures is a trailblazer when it comes to posting movies online. Not only is the studio posting more full-length films on the Web (more than 60) than competitors but the quality of the movies appears to be better. At Crackle are such films as "The Opposite of Sex", "Groundhog Day," "El Mariachi," "Go," "Tommy," and "The Professional."
The studio has also been very willing to license content to such outlets as Hulu, Gaia, Sprint and AOL. Hulu has a deal to showcase nine films, including "In the Line of Fire" and "Single White Female."
Here's the catch: judging from the other distribution deals Sony Pictures has struck, it probably wouldn't give YouTube access to more than 15 movies. The studio has also asked some partners to display films using the Crackle video player, a request that undoubtedly is designed to give Sony Pictures control of advertising and to direct people back to Crackle. The studio also doesn't allow partners to syndicate its content, which means YouTube users won't be able to embed Sony films on their blogs or personal Web sites.
If you're YouTube, you shouldn't care. If you want to become the place for all things video--user-generated as well as films and TV shows--and if you believe your audience is too big for Hollywood to ignore and that eventually advertisers will pay a premium to get in front of that audience, then at this point you jump through hoops to get the best content.
YouTube and Google can't be too choosy. The truth is that two years ago they miscalculated how much they needed Hollywood. YouTube frustrated some studio and TV executives by saying "we're not responsible for the actions of our users."
Since then, YouTube managers have changed their attitude and have focused on making the site more appealing to big entertainment companies, such as offering better-quality streams, and filtering for pirated content. Still, what was true two years ago is true now: none of the big entertainment companies is going to allow Google to build YouTube's business on their content without getting something in return.
There's also the question of what the studios intend to do with the traditional distribution model. Hollywood has long had agreements in place to release films through a complex assortment of channels, including theatrical release, DVD sales, and cable, premium, and broadcast outlets. For example, film-industry sources say the money Hollywood earns from the Web is a trickle compared with the ocean of cash it receives each year from cable providers.
Nonetheless, more and more people are canceling their cable subscriptions and turning to the Web for entertainment. Even execs from the cable companies have acknowledged this. Last week, after Disney announced the agreement with YouTube, I asked Jordan Hoffner, YouTube's chief of content partnerships, whether YouTube, Hulu, and the other Web video services can convince Hollywood to wean itself off these other distribution channels.
"I think that what we're doing is we're dealing with a fragmented world," Hoffner said. "You can't just say you're going to count out any distribution channel and focus on one because audiences are moving to other places. We're one of the places they're moving to."
If YouTube only gets a handful of Sony movies and if they aren't the best and if there's lots of strings attached, YouTube should still go ahead. Sony and Disney are worth twisting yourself in knots for.
YouTube's decision makers should remember that Crackle currently hosts 60 movies but that is a drop in the bucket compared to what's available in Sony Pictures' vast film library, one of Hollywood's biggest treasure troves of film content.
A Sony-owned online video entertainment site is expected to unveil its latest "season" of Internet programs on Monday, as the media giant moves to beef up its online entertainment content.
Crackle.com, which Sony bought in 2006 when it was known as Grouper, will showcase shows that include sketch comedy by The Groundlings and Anytime with Bob Kushell , a five-minute talk show hosted by a Hollywood writer, Reuters reported Sunday. Crackle has adopted the television practice of rolling out new programming in seasons instead of rolling out episodes when they are completed. Crackle's season begins December 1, according to the report.
The six new shows, which will often have episodes no longer than 5 minutes, will apply the same production techniques used in TV and films, Reuters reported.
"Just because it has higher production values doesn't mean we're trying to mirror movies and TV," Eric Berger, a Sony executive in charge of Crackle, told Reuters.
Other shows include The Jace Hall Show, which will focus on video games, and Owen Benjamin Presents, which will focus on comedic how-to segments.
In August, Sony Pictures Television signed a distribution deal with pioneering Web series Rocketboom, in which Sony will handle all distribution and ad sales, as well as place its Crackle.com player on the Rocketboom site.
Crackle had 2.4 million visitors in October, Reuters cited Nielsen Online as reporting.
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