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YouTube launches its own streaming TV service

YouTube launches its own streaming TV service


Another way to cut the cord

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At an event in Los Angeles this afternoon, YouTube announced its own streaming TV service. The offering will mix live-streams of broadcast and cable television programming with the wealth of online video found on YouTube. It’s the latest in a surge of over-the-top (OTT) services trying to woo consumers who never bought into traditional cable television.

The service will exist as a standalone app. For $35 a month, subscribers get all four major networks — ABC, CBS, FOX, and NBC — and roughly 35 cable channels. That price covers six accounts, so each member of the household can have a personalized account that offers recommendations tuned to their taste. The kids will have to draw short straws, however, as you can watch up to three concurrent streams at a time.

There are some big holes in the lineup

Sadly, like many other streaming bundles, it has gaps. YouTube TV, as it’s called, will be missing channels from Viacom, including big names like Comedy Central and MTV. It also won’t have programming from Turner Broadcasting, meaning you won’t be able to get CNN, TBS, and TNT. AMC Networks, Discovery Communications, Time Warner and A+E Networks are also missing as of the launch announcement. Showtime is available as an add on, but HBO is not. But hey, YouTube TV is throwing in originals from its YouTube Red subscription service for free!

No specific date was given for launch, only that it would roll out in the next few months. And the service will arrive first in major markets, meaning smaller cities may have to wait. As for international service, don’t hold your breath. There are some other odd quirks. NFL content will be available on TV and PC, but not on mobile, where Verizon has the exclusive streaming rights.

The app looks sharp

YouTube gave a brief demo of the app today. It has some nifty search tricks. Ask it for time travel and you get programming where the plot involves that device. You can browse a tab of live programming, or search by genre. And yes, there is DVR-style recording for your favorite shows, with unlimited storage space in Google’s cloud, and the ability to skip over ads.

The service integrates with Chromecast and cast-enabled devices and Google Home. But when YouTube tried to show off voice search through a Google Home unit, but that demo ended up being a spectacular fail.

The last few years have seen a major shift in the advertising industry, with billions of dollars that once flowed into television commercials being shifted to the world of online video. YouTube has been among the biggest winners of this transformation, which is being driven in part by viewers who increasingly opt away from broadcast television networks and expensive cable packages. About 40 percent of millennial households rely on just an internet connection for entertainment.

Increasingly, the audience is online

Connected TV viewing grew by 65 percent last year, according to a study from Pivotal Research. And for some prime-time television programming, between 30 and 40 percent of the total views are now coming from connected TVs. Advertisers are eager to get into OTT, because it promises the quality and engagement of television with the enhanced targeting of digital.

YouTube revealed yesterday that users now watch a billion hours of video on its platform each day, quickly closing in on the volume of television consumed by all Americans each day. If YouTube’s new service can make its videos front and center on the biggest screen in the house, it can start to command a higher price for its ads. In exchange, YouTube’s new partners from the world of traditional TV partners can make use of its machine learning technology to improve recommendations and get users hooked on new shows.

While the momentum is working against traditional television, the incumbents still control the most popular programming and the majority of advertising budgets. “Traditional TV providers control much of this content, and they’ve been cautious about making their programming available outside the lucrative TV bundle,” explained Forrester analyst Brandon Verblow in a report. Until recently, “Even if many viewers want to cut the cord, they may not follow through as they realize they cannot get all the content they want.”

So far, most streaming services have been flawed

There is plenty of competition in the world of streaming bundles. AT&T has DirecTV Now, Sony has Vue, and Dish Network has Sling. Each offers a wide array of streaming packages, but the programming is riddled with major holes. Most besides PlayStation Vue don't have CBS, and Vue has its own problems, recently losing Viacom channels. Many major networks are available live through local affiliates, meaning important sports programming will be blacked out if your regional broadcaster doesn’t carry it.

More competition is almost certainly on the way. Hulu, which is owned in large part by the TV networks, has publicly announced its plans for a streaming service that mixes live programming with its on-demand catalog. And Apple has reportedly been trying for ages to pull off a streaming package similar to the one YouTube announced today.

Will YouTube be different?

Consumers are increasingly spreading their attention across traditional television, online video, and social media. Advertisers want to spend money in a way that reaches across those different mediums. YouTube, with its massive audience and wealth of information on the viewers who are watching, is well-positioned to help TV networks capture marketing dollars in this new and often confusing environment.

It’s also about reaching a generation that is increasingly unfamiliar with linear TV. “For kids under 18, it's really just YouTube, Instagram, some Snapchat, and Netflix for very young kids,” says David Pakman, a tech investor with Venrock. “These kids will never subscribe to cable, and even in a skinny bundle world, they don't know what brands like Dish are. I believe YouTube could bring traditional shows to their audience and expand viewing of those shows.” 

YouTube is promising technical superiority

YouTube also checks off important boxes in terms of technology and distribution. DirecTV Now has struggled to deliver reliable service, and the chatter in the industry is that these services “are not ready for prime time, because they have struggled to deliver live signals at scale,” says Rich Greenfield, an analyst with BTIG. In terms of the technological infrastructure and experience, “YouTube is probably the best positioned to deliver this.”

YouTube also offers its content partners incredible distribution. “Almost every person in the world with a smartphone or connected TV already has the YouTube app,” says Greenfield. The company has a sophisticated ad network serving up commercials to fit even the most obscure demographic. For TV networks “who better to monetize that type of digital inventory than YouTube?”

Can YouTube’s app help it stand out?

There was no hands-on demo today, so there are plenty of big questions we can’t answer yet. Probably the most important is how different this product will feel from the half-dozen competitors already in market. “All the live linear services coming out have almost no way to distinguish themselves from one another,” says Dan Rayburn, a streaming media analyst with Frost & Sullivan. “What does it come down to for consumers? Which ones work well. Which ones have an app or platform that is easy to use and that you are already familiar with.”