Michael Grotticelli /
04.21.2011 03:40 PM
YouTube to spend $100 Million to compete with traditional broadcasters

In a major overhaul of its online video service, Google's YouTube expects to launch about 20 different "channels" later this year — each featuring several hours each week of original arts, entertainment and sports programming.

YouTube will spend as much as $100 million on the project, according to a "Wall Street Journal" report, and is in talks with major Hollywood talent agencies to attract content creators to the Google-owned video service. The ultimate goal is clearly to compete with broadcast and multichannel TV service providers (cable, satellite and telco) for viewers.

Several industry reports claim that YouTube wants viewers to expand the amount of time they spend watching video on the website and to convince advertisers that these are desirable consumers. The site is planning a series of changes to its home page to highlight sets of "channels" around topics such as arts and sports.

About 20 or so of those channels will feature several hours of professionally produced original programming a week. Additional channels will be assembled from content already on the site.

YouTube is still in the process of designing the channels and in recent weeks has held meetings with Hollywood talent agencies such as Creative Artists Agency, William Morris Endeavor and International Creative Management to discuss the possibility of their clients creating YouTube channels.

The talks are more likely to result in deals with production companies or directors than with individual movie stars or other celebrities. Some of the channels may contain content hand-picked by certain "tastemakers" who could attract a following, the newspaper said.

In addition to increasing the average time a YouTube user spends on the site, which stands at about 15 minutes a day, the moves are aimed at attracting new ad dollars, including a portion of the $70 billion U.S. television advertising market.

YouTube is now the world's No. 3 website in terms of unique monthly visitors. Last year it generated about $544 million in net revenue. The site is expected to generate more than $800 million in net revenue this year, according to Citigroup estimates.

Google's network of websites claimed about 141 million online viewers in February, according to the metrics firm, comScore. Each viewer spent on average a little more than four hours watching content on Google sites, most of which was on YouTube.

By comparison, the average American watched more than 150 hours per month of broadcast television during the last three months of 2010 and 145 hours per month between July and September 2010, according to the Nielsen Company.

YouTube is just one of the Internet services hoping to challenge broadcast and cable television for viewers. In January, there were reports that Hulu and its backers are thinking of selling live online broadcast TV subscriptions. Hulu is an independently run company jointly owned by NBCUniversal, News Corp., The Walt Disney Co. and a private equity firm.

Also, Netflix is getting increasingly stronger when it comes to streaming premium content. The service recently signed a deal that will bring AMC's "Mad Men" to Netflix streaming beginning in July. Netflix also got the distribution rights for a remake of "House of Cards," a British political thriller produced in the 1990s. The show includes David Fincher, director of "The Social Network," as executive producer, and star Kevin Spacey.



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