YouTube needs to close the Windows if it wants the Good Stuff (Movies)

I wanted to know why more feature films weren’t showing up on YouTube given the ever increasing size of their audience.

Surely, you would think, that studios would be happy to go to the where the eyeballs are?   Why are there so little movies on YouTube?   Isn’t’ YouTube just an Odeon or Cinemark google-plex?

To answer the question I booked in a mate for lunch.   He sells major film rights for a top tier Studio to the new digital plays in emerging markets.   Over a beer and spring rolls here what’s I found out:

Until connected audiences are ready to pay more (let alone pay at all) instead of just swapping their time for adverts, premium content won’t be appearing on their tablets anytime soon.

Because premium long form content like feature films are expensive (VERY expensive) to make Studios have to pony a lot of cash upfront.   To run a successful business this way you need really predictable revenue streams to offset any risk.

Over  the 109 years since films started being made people have been trying to make money from them.  (pub trivia fact: The first narrative movie made was The Great Train Robbery by Edwin S. Porter – 1903)

Through generations of modelling and tinkering the film industry has come up with it’s current iteration of revenue channels via a system called Pay Windows: time slices across the lifecycle of the film offering variable access to the content with the sole purpose maximising the amount a viewer is willing to pay per viewing.

Other sites have done more detailed descriptions of the various windows but in essence the windows stack up go something like this:

  1. The Theatrical Window – the time the film is available in the movie theaters
  2. The Airplane / Hotel Window – the time you can see the film in a hotel or on a airline
  3. The DVD Buy Window -the time the movie is available as DVD purchase
  4. The Rental Window – the time you can rent the film
  5. The Pay Per View / TVOD window – the time you can access the content if you pay for it specifically
  6. The First Pay  / SVOD window – the time you can see the content via an over all subscription mode
  7. The Second Pay Window – the you can see this content on demand
  8. The Terrestrial  Window – the time you can see this in ad funded models via regular broadcast channels.

More or less these windows follow a sequential pattern with will them starting to overlap after the DVD Buy Window (i.e. You couldn’t buy the DVD of Transformers: Dark of the Moon until it was out of the sheathes – but you can still buy the DVD even though it’s available to watch on your cable/satellite provider via Pay Per View).

It goes without saying (but I’m going to say it anyway) that there are many exceptions to the rules – Straight to the Bin DVD movies that aren’t good enough for the theaters for example.

But for the sake of this discussion you can just assume that all films follow a similar cascading life cycle and value return.     Each step down deriving fewer and fewer coins from the viewer’s wallet.

And where does Netflix and Lovefilm slot in?  They are considered a First Pay / SVOD (Subscription VOD) provider.

YouTube?   Well currently no better that the Terrestrial providers since it uses the same ad funded models as your local broadcaster.

So even though YouTube commands over 490M Unique Viewers a day ( Feb 2011) the current value models deployed by major (read: Hollywood) Studios sees them as a drip tray of where content goes to die.

Weird right?   Well it’s even more mind bendy when you think that instead of looking to implement pay models YouTube (and it’s friends) are  commissioning (at great cost) their own content.

The question is why?   Why not implement a pay model and grab some of this prime pay dirt?   Well they have tried – way back in 2009.    WJS.com reported that the studios were in discussions with YouTube to rent videos http://online.wsj.com/article/SB125192241524880801.html

So what happened?  YouTube.com/movies happen – and for £4.50 I can get 48 hrs of …. Sleeping Beauty… or Johnny English Reborn…. or Scorpion King 3… in glorious HD!     I’m not rushing to the piggy bank.   Somehow YouTube, with over 490M uniques a day has gone into a TVOD (pay per view) model and commanded the content my nan wouldn’t watch.

So YouTube needs to close the Windows down; it needs to start charging premium rates.   Probably implement a credit system as well (ala Facebook Credits) and really forge out into the Connected Landscape.

But in the end the problem is much deeper.   Culturally we’re all still very much movie GOERS at heart – experience is what really matters when we open up the wallet.   Out of the house, lights down, sound up, mobile OFF – the Audience is Deaf Listening.   And until YouTube can replicate the EXPERIENCE it can say goodbye to the content it desires (sic: that people WANT to see).

– Cameron Church.