This is interesting - after announcing that YouTube TV had been expanded to reach 98% of US households back in January, YouTube is now reportedly looking to scale back its original content efforts, with competition in the sector proving too significant for the platform to gain a foothold with its own TV-like programming.
As reported by Bloomberg:
"The Google-owned business has stopped accepting pitches for expensive scripted shows, said the people, who asked not to be identified because the decision hasn’t been announced. The retreat from direct competition with Netflix Inc. and Amazon.com Inc.’s Prime Video service reflects the high cost - in billions of dollars - needed to take on those deeply entrenched players, even for a rich tech giant like Google, the people said."
Google has since clarified that it's not totally ceasing all new programming, but it is scaling back, part of its broader shift away from the original paid subscription model of its YouTube Red service.
The move suggests that YouTube sees significant enough potential in its existing business to not bother challenging those larger players. Bloomberg also notes that YouTube generated more than $15 billion in ad sales last year without exclusive, TV-like programming, so it may not need it. But the change in direction is worth noting, particularly as Facebook continues to re-align and ramp up its original content focus.
Both YouTube and Facebook have been rushing to gain more traction in digital TV, fronting up significant cash to invest in new, exclusive programming from a range of big-name celebrities and studios.
YouTube originally launched YouTube Red - and 'Red Originals' - back in 2016, which included a raft of exclusive, original programming which was set to become part of YouTube's TV-like offering, and position the platform as a genuine TV alternative.
The 'Red' brand was switched to 'YouTube Premium' early last year, and a few months later, YouTube also announced that it would make its original productions free to view, as opposed to subscription-based, signaling the end of the YouTube Red project.
This latest announcement looks to be the extension of this shift, with YouTube planning to fund fewer programs, and concentrate instead on its core projects, as opposed to taking on the growing investment from Netflix and Amazon.
Facebook, through its Watch platform, has also shifted its direction, moving away from news content, and more towards youth-focused originals as it seeks to find the right approach to maximize its return on investment for its original content.
This also comes as Apple launches 'Apple TV Plus', it's new, exclusive TV offering which will feature original shows and movies from a range of big-name stars.
As reported by The Verge, Apple's expected to spend $2 billion on original content this year, which it hopes will put it on competitive footing with Netflix and Amazon.
Given the rising competition in the digital video space, you can see how it could make sense for YouTube to scale back and let those bigger spenders battle it out, as it continues to build momentum for its existing offerings. But it also seems somewhat risky - YouTube could lose its position as the dominant online video platform, and lose ad dollars as newer online offerings come through.
Google must be confident of YouTube's niche value - which, to be fair, is a pretty broad niche. It'll be interesting to see how the other major players fare as they increase their spending on original content.