YouTube splashes out to lure TV viewers

YouTube is enlisting Hollywood's help to succeed in a generation of viewers more knowledgeable about smartphones than TV remotes.

The net video giant is aiming to create 25 hours of programming an afternoon with assistance from one of the vital top names in traditional TV.

The Google-owned site is spreading its wealth among producers, directors, and other filmmakers, using a US$100 million ($119 million) pot of seed money it committed last year.

The fund represents YouTube's largest spending on original content to date.

YouTube believes it's laying groundwork for the longer term. While the variety of traditional TV watchers has levelled off lately, more persons are watching video on cell phones, tablets and computers, especially the 18 to 34-year-old age demographic that advertisers covet.

The thought is to create 96 additional YouTube channels, which can be essentially artists' home pages, where viewers can see existing movies and click on "subscribe" to be notified when new content goes up.

Well-funded videos by a select roster of stars usually are more watchable than the common YouTube fare of cute cats and webcam monologues.

YouTube is betting a pretty good stream of excellent content will attract more revenue from advertisers, bring viewers back frequently and bolster its parent company's fledgling web-connected-TV platform, Google TV.

The money has enticed a number of TV's biggest stars, including Fast Five director Justin Lin, who directs episodes of Community, CSI creator Anthony Zuiker and Nancy Tellem, the previous president of CBS entertainment.

Zuiker is teaming on a horror series for YouTube after observing his own family's behaviour. His three pre-teen sons spend more time on phones, iPads and computers than watching TV nowadays.

"We wish to jointly take the chance with YouTube and roll the dice at the future," Zuiker says.

"The old regime goes to falter because everybody thinks the television is the single device that truly counts, and that is the reason just not the case."

For producers, it is a chance to create shows freed from meddling from major studios. They may be able to also stay relevant with a younger crowd whose viewing is moving increasingly online.

Several new channels akin to the extraordinary sports-focused Network A and Spanish-language Tutele have launched already. YouTube hopes to have all of them up and running by this (northern) summer.

"This was really about galvanising the ecosystem at large," says Alex Carloss, global head of original programming for YouTube.

"We see the portfolio [of funded channels] really representing the right of TV meeting the proper of the internet."

YouTube is not the only web video service that has began to pay for original content. Netflix launched the unique series Lilyhammer, while Hulu premiered Battleground.

But YouTube videos have a tendency to be under 10 minutes, rather than fitting into traditional half-hour or hour-long TV slots. And apart from a couple of guidelines, ultimate control is given over to the artist, including what's uploaded and when new episodes appear.

YouTubers also escape with far edgier stuff than the center finger that rapper M.I.A. flashed through the Super Bowl half-time show.

Although YouTube's entire investment is lower than 1/2 what some studios spend on one blockbuster movie, a couple of third of the hot channels were awarded to scrappy YouTube veterans who already understand how to make it big online while keeping production costs low.

YouTube expects to recoup what it spends at the grants by sharing ad revenue the recent videos generate.

At Maker Studios, which received money for 3 new channels, the funds have turbo-charged an already teeming operation that has about 160 full-time staff spread across several buildings filled with props and computers in west L. a..

On a up to date visit, two scenes were being shot in an alley. One was for a parody of a Christmas movie trailer. The opposite was for a brand new series a couple of crime-fighting van called Si, Es I, Pepe.

Maker cranks out about 300 YouTube videos every month at a bare-bones cost of about US$1000 each.

The studio's videos generate a whopping 500 million views every month, thanks largely to established hits that come with Ray William Johnson's roundup of crazy videos and such viral giants as Epic Rap Battles of History.

Advertisers pay as much as US$10 per 1000 views for video ads that precede the featured content, based on TubeMogul, a tremendous buyer of YouTube ads for the nation's biggest advertisers including Proctor & Gamble and News Corp's 20th Century Fox movie studio.

Established YouTube partners share roughly half their revenue with the location.

So if Maker videos generate US$1 or US$2 in ad revenue per 1000 views, it will just be scraping by.

Maker co-founder Danny Zappin, who quit film school to purchase a high-end camera to begin a career on YouTube, says it is a tricky balance to maintain the studio's share of ad revenue higher than the price of video-making.

The undisclosed amount it got from YouTube, on top of the US$1.5 million venture capital it received a few year ago, lets Maker post more videos without watching for the views and cash to roll in. "It gives us resources and runway that we wouldn't otherwise have," Zappin said.

For other less established players in online video, the cash has given them an added reason to get entangled.

Former CBS executive Tellem teamed up with TV entrepreneur Brian Bedol to create Bedrocket Media Ventures, an upstart production company behind several new YouTube channels, including Network A.

The funding "allowed us, or caused us, to highlight YouTube in advance of other platforms", Bedol says.

Analysts believe YouTube has made a sensible investment at a time ad rates for online video are rising.

YouTube could be successful with only a few big hits - reflect on Rebecca Black's Friday - however thousands of videos fall flat. It's corresponding to the hit-or-miss solution to traditional TV and flicks.

"The investor community doesn't study this as money wasted," Macquarie analyst Ben Schachter says.

Since promising to share ad revenue with its most excellent uploaders in 2007, YouTube has invested in original content mainly by deciding to buy equipment and coaching new artists, however it was never as big as this.

Backing up its new strategy, YouTube also revamped its homepage to prioritise channels and suggestions above just essentially the mostsome of the most-viewed videos. The revamp allows advertisers to focus on popular channels or categories of content more easily.

YouTube's funding plan takes a page from Apple's playbook. When the iPhone maker launched its App Store in 2008, a US$100 million seed fund created by Silicon Valley investor John Doerr spawned countless numbers of recent apps.

"Our developers aren't software engineers," YouTube's vice-president of worldwide content partnerships, Robert Kyncl, told a practice last month.

"Our developers are Hollywood stars, are online stars, are regular folks such as you and that i."

If nothing else, the injection of funds will spawn content never before seen on any screen, large or small.

Fast Five director Lin, who's teaming with YouTube stars Ryan Higa and Kevin "KevJumba" Wu at the "YOMYOMF" channel, said his focus isn't to attempt to discover audiences with stereotypical Asian-American content.

Rather, the postulate is to provide a platform to those that have unique voices but haven't been heard yet.

He says Higa and Wu didn't follow any set rules after they jumped to popularity with a mixture of oddball humour, brutal honesty and rap.

"They only did what they loved, and folk came," Lin said.

"If we are going to fail, i'd rather exit with that philosophy."

- AP

YOUTUBE HITS

KassemG's parody of Christmas movies - http://bit.ly/yzTt5i

Si, Es I, Pepe - http://bit.ly/AquLL8

Epic Rap Battles of History - http://bit.ly/xsjKks

Ray William Johnson - http://bit.ly/wYDiaC

YOMYOMF - http://bit.ly/ygxnuH

Network A - http://bit.ly/wDeiZY

Anthony Zuiker's partner, BlackBoxTV - http://bit.ly/yQFM13

By Ryan Nakashima