After years of pushing a premium subscription tier, the Google video giant shifts strategy on shows.
Three years after YouTube launched a subscription streaming service aimed at making it a destination for premium programming, the online video giant is shifting its strategy.
The Google-owned platform is expected to scale back its scripted output beginning in 2020, a source with direct knowledge of the company's plans tells The Hollywood Reporter. The move comes as executives plan to double down on YouTube's ad-supported business by making all originals, like Karate Kid spinoff Cobra Kai and Doug Liman-produced Impulse, free to its 2 billion users going forward regardless of whether they pay $12 each month for subscription service YouTube Premium.
The YouTube Originals team, led by former MTV executive Susanne Daniels, has started informing creative partners about the shift, per multiple sources, one of whom describes the pullback as "a serious budget reduction." YouTube isn't signaling a complete end to its scripted business — it recently ordered pilots for an adaptation of The Edge of Seventeen and Ben Stiller-produced big-rig drama Dark Cargo — but the change has raised questions about its willingness to compete for big-budget fare. "Other platforms have had traction with scripted, but they don't feel like there's an opening for them," says one producer briefed on the company's strategy.
YouTube chief business officer Robert Kyncl acknowledges that there will likely be a pause in buying as the company shifts to its new release strategy but says of a scripted pullback, "it is far too early to tell something that decisive." He adds that the streamer has a healthy slate of upcoming projects, including Jordan Peele-produced anthology Weird City and Kirsten Dunst starrer On Becoming a God in Central Florida.
The YouTube Originals budget, said to be in the hundreds of millions annually, has always been overshadowed by those of Netflix and Amazon, which shell out several billion each on programming. And while its competitors have been locked in an escalating arms race, spending more each year to lock down top talent and stockpile IP, Bloomberg reported in February that YouTube would hold its budget for the next two years, making it even more difficult for executives to take big swings.
After several attempts to court Hollywood over the years, YouTube made its biggest swing yet in 2015 when it hired Daniels to oversee its newly formed original programming group. Her early slate featured YouTuber-fronted projects like Scare PewDiePie but soon Daniels began to greenlight more ambitious fare like Step Up: High Water, based on the popular film franchise. Most shows were available only to subscribers with pilot episodes often released for free to entice potential subscribers. In 2017, YouTube also began ordering projects that would stream with ads for non-subscribers, including Demi Lovato documentary Simply Complicated and a live stream with Will Smith, in which he bungee jumped out of a helicopter to celebrate his 50th birthday, that was viewed by over 17 million people.
Soon, there won't be a distinction between programming that is available with ads or without. Kyncl and his team are renegotiating deals to allow viewers to watch all YouTube Originals without pulling out their wallets.
"If you look at our originals over the last few years, our main goal was to drive subscribers to YouTube Premium," says Kyncl, adding that he had received advertiser interest about projects, like Liza on Demand, that were previously ad-free. "But through experimentation, we've also learned that we can make a lot of the projects work incredibly well when we make them available free to users."
Rollout strategies will vary for each project, he says, but scenarios YouTube is considering include releasing a show week-to-week for free or giving viewers the option to binge if they subscribe to Premium. YouTube already experimented with this model on the release of LeBron James-produced docuseries Best Shot. Another option would be to offer subscribers an extended cut of a film, as it did with Simply Complicated.
YouTube has never disclosed the size of its subscription business, which also includes a five-month-old music offering and live television bundle YouTube TV, but early reports about its premium video offering (originally named YouTube Red before a rebrand last spring) suggested that was slow to catch on with viewers. Although it may appear that YouTube is backing away from its subscription strategy, Kyncl insists that's not the case, pointing to a continued international push as a sign of the company's commitment to Premium. "One of the main reasons that people publish content to YouTube is for this incredible global reach," he says. "The same should be true for our originals."
This story was originally published by The Hollywood Reporter.