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YouTube Red Looking to License TV Shows, Movies

3 Dec, 2015 By: Erik Gruenwedel

So much for home-grown talent. YouTube Red, the upstart Google-owned $9.99 monthly subscription streaming service, reportedly is looking to license TV shows and movies from major media companies and Hollywood studios.

While discussions are preliminary and no agreements are pending, according to The Wall Street Journal, which cited sources familiar with the situation, the strategy underscores the value well-known entertainment brands and programming have.

YouTube is synonymous with online video. Its user-generated videos generate the most monthly traffic (more than 1 billion viewers) of any website in the world. It has also developed a cast of personalities (i.e. Justin Bieber, Michelle Phan, Felix Kjellberg) over the years, many of whom feature prominently in Red original programming.

But as Netflix, Amazon Prime Instant Video and Hulu Plus have discovered, attracting subs requires (initially) more than original programming. Netflix has generated hits with “House of Cards,” “Narcos” and “Orange Is the New Black,” but it also has more than $10 billion on the books in content license obligations — much of it to traditional media companies, including Walt Disney, CBS, Lionsgate and AMC.

Amazon’s SVOD service produced a critical hit in original series “Transparent,” but it has built Prime Instant Video on the backs of third-party catalog programming, including HBO’s first SVOD license deal.

Hulu, which is co-owned by Disney, 21st Century Fox and Comcast, has a robust slate of original programs, in addition to a slate of primetime series from Fox, NBC, Sony Pictures, Viacom and pay-TV provider Epix, among others.

It reportedly matched Prime Instant Video spending $1.5 billion this year on content, including securing exclusive rights to Comedy Central’s “Inside Amy Schumer,” “Seinfeld” and “South Park,” among others. By comparison, Netflix spent more than $3 billion.

“YouTube is dominant in ad-supported online video, but [it has] missed the subscription side. To get people to pay [it] will have to have higher-end content,” Mark Terbeek, with venture capital firm Greycroft Partners, told The Journal.

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