Channel store makes perfect sense for YouTube, and it’s been a long time in the works: The Information reported on a similar plan in early 2020.
More recently, the company has been signaling this is coming: “I think whether the content is distributed in a pile, or where over time we dig other ways of distributing it, YouTube can be a great partner there,” YouTube VP of product management Christian Oestlien recently told. “We’ve never looked at the world as these binary choices between us and partner services… we think all of us can coexist healthily.”
YouTube is building a system that would allow users to subscribe to streaming services through the YouTube app, The Wall Street Journal reported and could launch the so-called “channel store” as early as this fall. The Journal’s report didn’t say which services might be part of the store, only that YouTube has been talking with various entertainment companies.
It is now maybe the single most popular idea in the streaming business. Tech companies, particularly those who have tried to make their original content and seen how hard it is, are deciding they’re better off handling everything but the shows and movies. You already have an account with Verizon or AT&T, for instance, and a bill you pay them monthly, so your carrier can pitch itself as a valuable marketing partner and infrastructure provider for subscriptions. It’s a lot like the old cable bundle, just… internet-ified. And the upside is the same for app store providers and game stores: a small cut of everything you buy.
Apple, Amazon, and others make this case, often to significant effect. For example, HBO Max got 4.5 million subscribers through Amazon Channels, the Journal reported, and briefly bailed on that partnership but is reportedly planning to return. Even Walmart is reportedly thinking about getting in the game.
However, YouTube may have the most robust case of any channel store partner. It has an enormous audience, upwards of two billion people a month, many of whom already have an account and a credit card saved to YouTube. They already have the app downloaded; they might even be watching Peacock or HBO shows one clip at a time — it’s an easy upsell to get them subscribed to the service.
YouTube even has some of this platform already built out. For example, YouTube TV is, to some extent, already a channel store; you can subscribe to HBO Max, Starz, Showtime, and other channels and services right from within the YouTube TV interface. In addition, you can purchase and rent movies directly on YouTube and watch some things for free. More recently, code in the Google TV app suggests that 50 free TV channels are coming to the platform.
To some extent, this feels like a final admission that YouTube can’t compete head-on with the Netflixes and HBOs of the world. The company has long scrutinized ways to make and offer more premium content, including a handful of ill-fated attempts at making TV-style original content. YouTube is already the go-to place for clips and highlights of TV shows and movies but hasn’t found great ways to integrate premium Hollywood content onto the platform.
YouTube will have to convince streaming services to make it work. It’s not a long-term threat to their business; YouTube’s relationship with Hollywood has improved over the years. However, many entertainment companies still consider it a partner and a necessary evil.
Even though Apple and Amazon have competitive services, they don’t represent the existential, paradigm-shifting threat to the TV and movie industry that YouTube does. How the Peacocks and Paramount Pluses of the world will weigh the value of YouTube’s massive audience versus the competitive pull of its content will go a long way toward deciding whether YouTube can be the channel store it hopes to be.
Everybody will want to be the channel store in the future — it’s the app store model all over again, and there’s a lot of money at stake. But if YouTube can pull it off, it might be even more. A YouTube app with all your streaming shows and movies, everything to buy and rent, plus all the creators you love and the search engine that underpins it all? That would be the most powerful app in entertainment, and it wouldn’t even be close.
YouTube is an online American video sharing and social media forum headquartered in San Bruno, California. It was pitched on February 14, 2005, by Steve Chen, Chad Hurley, and Jawed Karim. It is presently owned by Google and is the second most visited site after Google Search. YouTube has higher than 2.5 billion monthly users who collectively watch more than one billion hours of videos each day. As of May 2019, videos were uploaded at more than 500 hours of content per minute.
Eighteen months after posting its first video in October 2006 and ten months after its official launch, YouTube was purchased by Google for $1.65 billion. Google’s right of YouTube expanded the site’s business model, from generating revenue from advertisements to delivering paid content like movies and exclusive content created by YouTube.
It also shows YouTube Premium, a paid subscription option for watching content without ads. YouTube also approved creators to participate in Google’s AdSense program, which seeks to generate more revenue for both parties. YouTube reported an income of $19.8 billion in 2020. In 2021, YouTube’s annual advertising revenue raised $28.8 billion.
Since its buy by Google, YouTube has grown beyond the core website into mobile apps, network television, and the ability to connect with other platforms. Video categories on YouTube include news, short films, music videos, video clips, feature films, documentaries, audio recordings, movie trailers, teasers, live streams, vlogs, and more.
Most content is generated by individuals, including collaborations between YouTubers and corporate sponsors. In addition, established media corporations like Paramount, Disney, and Warner Bros. Discovery have also created and expanded their corporate YouTube channels to advertise to a larger audience.