Mobile TV & Video: YouTube Launches Subscription Channels

POSTED BY Analyst Team
Last month came the announcement that online video giant YouTube was launching a subscription service, charging users fees starting from $0.99 per month. The scheme is currently being piloted with a 53-channel line-up, however YouTube announced that more channels would be rolled out in the coming weeks. Once viewers have subscribed from a computer, they will be able to access content from a plethora of devices – smartphone, tablet, TV, with more options coming soon both for viewing and and subscription. This poses an interesting question – will users be able to pay for their YouTube subscription through direct carrier billing if the purchase is carried out on their mobile device? Certainly Google itself has implemented carrier billing solutions in 10 markets through partnerships with 19 operators at present. Channels which do implement a subscription model will themselves keep 55% of the revenue, with YouTube taking 45%; if payment via carrier billing were to be implemented, YouTube would have to forego some of its own revenue share. A further driver for such a billing mechanism is that YouTube is already immensely popular on handsets, seeing 25% of its global views come from such devices. A YouTube app is preinstalled on millions of Android devices, with native and web-apps developed for other devices. Furthermore, carrier billing would allow YouTube to monetise consumers who might not own a credit card or have a bank account: there are more than 80 countries in which the proportion of unbanked adults is in excess of 50%, and in many such markets mobile viewing usage is rising sharply. Regardless of the payment mechanism, this will undoubtedly change the competitive landscape for mobile TV and video providers, considered in one of Juniper’s latest reports: Mobile/Tablet TV & Video: Content, Broadcast & OTT Strategies. The threat to pay-TV providers of consumers ‘cutting the cord’ seems greater than ever, and they must seek to enrich their mobile offering for users. Yet given that visitors are accustomed to accessing YouTube and watching videos for free, the video hosting site will also need to bolster its value proposition, ensuring the paid content is of such a quality that deems it worth paying for. Network operators also face the challenge of relieving their networks of the congestion caused by users ‘snacking’ on content such as YouTube clips, whilst continuing to generate revenue.