YouTube will soon be competing with traditional cable providers by offering online TV viewing services through their channel. Over the last two years, YouTube has been working on refining their YouTube TV offering; in the next few months, select U.S. cities will have access to over 40 premium cable networks for a monthly fee of $35. Channels on this service will include ESPN, CBS, FOX, NBC, and ABC, as well as regional sports networks.
With over one billion hours of YouTube content watched each day by users worldwide, it’s no surprise that YouTube is expanding their services. Television provides an opportunity with the increases seen in “cable cutting” (especially by the younger demographics) and a rise in alternative programming options such as Netflix and Playstation Vue. According to a 2016 CRTC report, traditional TV viewership mainly decreased among the 12- to 34-year-old age group, and 8% of Canadians now subscribe to alternative online viewing options instead of traditional cable networks. Options such as YouTube TV provide younger generations with more flexibility, lower costs, and more control.
Opportunities and Advantages
- Premium content: Access to over 40 premium cable networks and membership to YouTube Red (YouTube original content).
- Flexibility: Ability to cancel subscriptions at any time, with no contracts in place — unlike traditional TV.
- Low-cost: The monthly subscription fee of $35 is significantly lower than traditional cable, which is appealing to younger audiences. The latest CRTC report showed that monthly TV subscriptions continue to increase, from $65.25 in 2014 to $66.08 in 2015.
- Personalization: Families will be able to access YouTube TV with 6 user profiles allowed at a time, with separate passwords and logins. Three simultaneous streams can also run at any given time.
- Storage: Unlimited Cloud DVR storage and users able to record shows for up to nine months later.
- Multi-screen viewing: YouTube TV will integrate with Chromecast, allowing users to stream from their phone, desktop, or tablet to their TVs.
- Sophisticated AI: Users will be provided with tailored recommendations for content categories, genres, and programming based on their viewing habits. YouTube TV’s search capabilities will also list relevant shows based on specific search queries.
Limitations and Challenges
- Regional exclusivity: The service will first only be offered to select US cities and there is no official word on whether it will expand to Canada or other countries. Local restrictions are due to channels such as ABC and Fox being negotiated on a regional basis.
- Network limitations: YouTube has been facing challenges in partnering with certain key networks such as MTV, AMC, HBO, CNN, and the Discovery Channel, who are withholding content and demanding high partnership costs. However, YouTube did note that they are still negotiating with certain networks to add further channels to their current list.
- Competition: Similar services already exist in the U.S., including AT&T’s DirecTV and Dish Network’s Sling TV which offer comparable subscription prices and network packages. YouTube TV will need to differentiate itself and leverage its strengths to succeed.
- Device limitations: Although compatible with Chromecast, YouTube TV does not integrate with Apple TV, PS4, or XBOX One, which will exclude these audiences. There are also limitations in device viewing for different types of content. For example, Verizon has an exclusive deal for mobile viewing of NFL games. YouTube TV users will therefore only be able to watch NFL content through their desktop or TV.
What YouTube TV could mean to advertisers
From an advertising perspective, YouTube TV could be a game-changer. Although there have been no details officially released regarding advertising on YouTube TV, it will be no surprise for the channel to go down that route and further monetize on content. The possibilities for advertising on YouTube TV would be astounding for marketers and it would be competing with the traditional TV buying landscape.
- Targeting capabilities: Currently, traditional TV ad buying is limited to high-level demographic targeting (e.g. adults 25-54), whereas YouTube TV would provide the opportunity to reach users based on demographic, psychographic, and behavioral information pulled through Google’s extensive data. Dynamic ads could then be displayed for different audiences. Retargeting and Lookalike targeting capabilities would also allow for catered messages and offers for users previously engaged with a brand.
- Extensive reach: TV advertising is typically purchased on a regional basis, with the exception of Specialty TV programming. With Google planning on rolling out YouTube TV throughout the US, ad buying could potentially be on a national basis.
- Integrated campaigns: Campaigns through AdWords, the Google Display Network, DoubleClick, YouTube TrueView, and YouTube TV could work together for seamless targeting and messaging across all Google platforms.
- Reporting and data: By integrating into Google Analytics, users would be able to pull granular insights into how the users who viewed ad content later interacted on their website. ROI and conversion data would be significantly improved compared to traditional TV buys, which would be the biggest differentiator.
YouTube TV presents an exciting opportunity to reach users moving away from traditional cable packages and searching for alternative options. The way viewers are accessing content is evolving, with multi-screen viewing becoming a necessity for users on the go. YouTube TV is stepping in to allow users to view content when and where they want, in a more flexible and low-cost fashion. Different profiles, streams, and tailored recommendations will also lead to a more personalized viewing experience. At the same time, YouTube TV has implications for advertisers as well, with the likelihood of providing ad placements with granular targeting and reporting capabilities.
Although there are no current updates for YouTube TV in Canada, U.S. citizens can stay informed by subscribing to the YouTube TV email list.