Friday, March 19, 2010

Has YouTube Peaked ?

The latest ComScore figures for internet TV viewing show another decline in the YouTube audience. Meanwhile its totally dominant position in markets such as the UK is slowly being chipped into, largely by traditional broadcasters.

Figures around the UGC service bought by Google for $1.65b in 2006 are always obfuscated, but there are claims that YouTube is in line to make $1b in revenues this year, but I personally still doubt that this would be a profitably division if all costs such as legal and energy costs were factored in.

Attempts to monetise YouTube have ranged from the unsuccessful to the bizarre. I have long pointed out that all the service needs to do is introduce playlists, enabling a more traditional TV ad model, in order to succeed.

Instead YouTube is now focusing on a wide range of revenue tools from overlays to producing microsites.

But short form video has its disadvantages. There is a good reason traditional TV is still regarded as the topline medium for building brands. It all comes down to engagement.

YouTube treats video like any other web content. But the dynamic of video is very different. Whereas traditional websites make more money the more the user clicks, with television the broadcaster makes more money the less the user clicks.

But to the figures, skewed by being for February, making the fall from 13.2b to 12.8b video views potentially a seasonal anomaly. Overall viewing figures for video online also fell with services like Hulu experiencing greater drops. (Unlike the UK where the weather has a huge effect on viewing figures for online, in the US even the very bad weather that hit the North East wasn’t enough to have an impact, in my view).

So, is this significant ? I think it is. Coming on the back of Facebook overtaking Google as the most popular website, chinks are appearing (indeed, Facebook is serving more and more video). Google is a company with vast resources, but stretched very thinly in all kinds of directions. They are a company with a ‘our way or the highway’ mentality which starts with the conjecture that all traditional media is broken and needs to be fixed. Gradually, though, with video they have had to become far more traditional in their outlook, down to the oldest trick in the book – acquiring sporting rights. Google copying Murdoch, that’s a sign of the times.

There’s little doubt that YouTube will generate more revenues for YouTube in the coming years, but I get the feeling that a tipping point has been reached and online TV is experiencing a flight to quality.