3 Reasons Why “90% of YouTube Premium Channels Will Fail”

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With all the talk about YouTube original channels asserting its role, it is become increasingly clear that like the many television programs that will dot the landscape this fall, a significant amount of them will not live beyond the first season, let alone the first thirteen episodes.

But one panelist at the recent Digital LA NewFronts event last Monday suggested that while YouTube will be growing, “90 percent” of the funded YouTube channels are destined for failure. George Ruiz of ICM, who made the prediction, joked that the only ones that would be standing are his fellow panelists. David Beebe of Fishbowl Worldwide Media concurred with Ruiz’s prediction, noting that “you look at the Fall TV season and those shows either stay or go, it’s what sinks or what floats.”

It seemed that nearly all the panelists agreed with Ruiz’s assertions. Whether Ruiz’s prediction is scientific remains to be seen; however, it is clear that some of the new original channels on YouTube may have a short shelf life, and here are 3 reasons why:

1) Trying To Mimic TV Model Too Closely

In an attempt to woo major advertisers, YouTube is investing $100 million into producing new content and a $200 million marketing push. That’s a tall order for advertisers to handle and the company understands it. However, YouTube is playing it too safe by bringing in established, mainstream personalities you see on television ad film to star in these new programs on channels such as WIGS. Problem is, audiences for entertainment programs have been and are always fickle.

Viewers have long made it clear on YouTube of what works and what doesn’t work by choosing to watch and making their voices heard on the comments page or by sharing. Failing to engage users may bring bad omens for these premium channels. If you can’t convince them with a good reason to ditch the rabbit ears, then advertisers will avoid them. That means the dreaded c-word—cancellation.

2) Viewers Value Independence

Since the first video on YouTube made its debut 7 years ago, YouTube has become a magnet for those expressing themselves or to try their luck at what they do best. Viewers have rewarded these artists with making their videos viral and effectively changing the cultural and entertainment landscape forever. In addition, what sets these independent artists on YouTube apart is their close interaction with their fans through the comments page and through the number of shares, likes and views. Without the spontaneity and independence of ambitious average Joes, dreamers and ranters, the company would not have the influence it has today. To just sprout out videos for the sake of getting advertising revenue and rewarding clout rather than talent will not necessarily mean more views for their channel.

3) YouTube Expanding Too Fast

Of course the bigger problem with YouTube’s aggressive push to bring their funded content to the masses is that they’re growing too fast. We understand YouTube has to be bold and ambitious to survive, but funding 100+ channels by summer and expect a great return on their investment? Just read this list when YouTube introduced original channels back in October and you’ll see where this is going. YouTube contends they’re funding so many channels because they want “to bring an even broader range of entertainment to YouTube, giving you more reasons to keep coming back again and again. And for advertisers, these channels will represent a new way to engage and reach their global consumers.”

It’s too much for the audiences to choose from and whatever channel withers down that road will die a lonely death. Focusing more on what has already worked and funding a smaller batch may not give that broader range that the current plan has, but it would sure save YouTube some money for content that deserves recognition.

Are YouTube’s original channels destined for success or will many crash and burn as some are predicting? Let us know below.

[Source: Ad Age, Deadline.com, Stickcam]

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  • Kinowolf

    YouTube will generate $3.6 billion in revenue this year. Handing out $100 million in advances is nothing. It’s a venture capital mentality. If 10 of those 100 channels succeed and become multi-million dollar outlets, they’ll have succeeded in their goals and can expect a positive ROI. At the end of the day, YouTube Originals is just about showing advertisers that they’re making serious strides in adding premium content. In terms of pulling down ad dollars, they’ve already succeeded. 

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  • http://cjpdigital.com/ Wilson Cleveland

    I have a lot of friends who were given one of YouTube’s new 100 channels so of course I want all of them to succeed, but YouTube’s strategy as I understand it, is just confusing. 

    1. I’m over-simplifying but TV advertisers don’t pay networks bazillions of dollars based on the quality of the network’s programming or its ratings. They pay bazillions for the scarcity of ad inventory broadcast and cable television provide. You can’t manufacture scarcity on the world’s third-largest website, a site everybody can contribute to. That ship sailed 7 years ago this week. If YouTube wants to be taken seriously by TV advertisers, promoting stats like “60 hours of video are uploaded every minute, or one hour of video is uploaded to YouTube every second.” and “More video is uploaded to YouTube in one month than the 3 major US networks created in 60 years” aren’t helping.    

    2. YouTube spent over $100 million on 100+ channels then shrunk its homepage almost by half. Most of these new channels are practically undiscoverable. What message does that send to advertisers? Why would they pay higher ad rates for shows/channels when the network makes them so difficult to find? And speaking of messages YouTube sends to advertisers, what does it say to a brand when the network allows viewers to skip your ads after 3 seconds?  

    3. Not every new channel got $1 million. In fact, most got much less than that (some got more). On paper, $1 million looks incredible but when you consider how much unique content these creators are contractually required to produce across multiple channels on a weekly basis for an entire year, it’s just not much money. Consequently, most of these creators are forced to produce shows for their “million dollar YouTube channel” (and ONLY their “million dollar YouTube channel”) on a shoestring budget, which only perpetuates the very “low budget” perception YouTube thought it could change by spending the $100 million to begin with.

  • http://blog.twelveintentions.com/ Jessica Brookman

    Great content is still largely undiscoverable unless you’re fluent in the internet. Basically, YouTube (and much of the frontline of internet dev) is narnia and not many people know how to find the door in.

  • http://www.facebook.com/pickup101 Benny Luo

    I definitely agree, why re-invent the wheel if it ain’t broke?

  • http://twitter.com/jeremiahjw Jeremiah Warren

    I think it would have been better if YouTube invested money in channels, rather than creating new shows and premium channels. Give Freddie Wong some money so he can have some better locations, or give Julian Smith funds so that he can bring on notable actors. There will be YouTube stars attached to these new channels, but the problem is that their fans have to re-subscribe to a different channel. If they were creating these shows on the channels of the YouTube star, I think it would be very successful. 

    It seems that this is going to be a repeat of when all the networks were trying to get into web series. Granted, a lot has changed since then, and there will be a significant amount of marketing dollars backing this, so maybe it will be more successful. 

    Maybe I’d be more optimistic if YouTube had given me a small percentage of that 100 million. ;)

  • http://www.facebook.com/pickup101 Benny Luo

    One of the interesting things about products online is that it’s mainly about niche markets, not hits. Take mainstream entertainment for example, in movies like Transformers, it contains action, comedy, and romance that is design to appeal to a wide audience. There are so many distractions in the internet that content that hits well its really based on how long you can grab the viewers attention at that moment in time. 

    I think that many of these channels aren’t doing well simply because they are trying too hard to be TV. Think of it this way, when you listen to a new song for the first time on the radio, the music gets distributed to a wide audience and a chunk of that decides whether they like it or not. Now compare this to a YouTube video where it gets distributed to a small group and depending on how that group responds to it, it can potentially go “viral” from there. 

    So whats my point? How you market a product in traditional media is the complete opposite of how you market to the new media audience. I think new media content producers need to understand this formula if they want their content to succeed. 

  • http://twitter.com/CamsCreations Cameron F. Sun

    From what I’ve seen so far, only Sourcefed is doing great. Some other ones are doing decent, but the majority seem to have trouble finding large dedicated audiences.

  • http://www.facebook.com/pickup101 Benny Luo

    LOL! Thanks for catching that Joe! :)

  • Joe Penna

    That’s the issue. According to this, YouTube is investing $100,000,000.00 into content but only $200.00 into marketing.