YouTube’s business strategy has been a mystery for a long time mainly because it is still a free online service, which allows users to upload and watch videos about almost everything, most of us are familiar with YouTube!…
When Google bought YouTube for $1.65 billion, the question revolving around the whole world, WHY?… Everyone thought it could make it by generating enough advertisers to make it profitable… but was that enough to help it compete with the Hulu’s of the world?
Now, the company will start generating more profit as it introduces its first incursion into the business of charging users to stream full length feature films. YouTube’s first step into this market includes five independent films tied to the Sundance Film Festival available for ten days at $3.99 per rental. With 2,684 views the company generated a profit of around $10,000 dollars.
Apparently, the Sundance movies are just the beginning of a more ambitious pay-per-view project. In a few months, the company will start offering television shows and commercial movies for rent as well. Now, we know the plan…
This first attempt generated small revenue for Google. So, YouTube hasn’t represented a direct competition for other online movie services so far. Still, we can interpret the movie rental service as a new way of “monetizing” a service which represented a huge investment for Google in 2006. The Giant paid $1.65 billion for YouTube and is now trying to generate income from such a huge investment.
We will have to wait and see what happens. Maybe in a few months, Apple’s iTunes Store, Hulu, Amazon.com and Microsoft’s Xbox Live will have to start worrying about YouTube’s growing competitive skills. What do you think? Do you think this could work for YouTube?
For the moment, it’s early to judge the service since it only involves a few independent movies… no blockbusters or hyped up movies. These type of movies and documentaries don’t attract large audiences, but they are useful for testing the market. If you are an entrepreneur, it’s a good idea to learn from these online businesses. Taking a chance can pay off, but we must be good a defining our market and testing it.
Keep in mind that entering a new market and introducing a new product without first testing your market is like jumping off a cliff into the sea!
Now, probably the company is pushing a more aggressive promotion strategy to have a profitable and successful plan. Including famous and commercial movies will be crucial if YouTube’s attempt to increase its profits.
Now the question is: What makes YouTube different from the rest? Will it appeal to the younger demographic that has made YouTube such a social media success?
Sources
YouTube’s Take from Movie Rentals: $10,709.16
YouTube begins its push up into online movie rentals
