Analyst: YouTube Channels No Immediate Threat to Entertainment Companies
NEW YORK -- YouTube's long-expected channels initiative, which the Google-owned video site finally unveiled late Friday, is no immediate threat to entertainment companies, but it could grab some advertising dollars traditionally focused on TV and position Google as a competitor over time, Barclays Capital analyst Anthony DiClemente said in a report on Tuesday.
The report, entitled "Will YouTube's offering move the needle?," analyzed the planned launch of around 100 online video channels with such celebrities as Jay-Z, Madonna, Shaquille O'Neal, Amy Poehler, Sofia Vergara and Tony Hawk, designed to create a next-generation video hub.
"While we do not believe this is an immediate threat to studios, content providers or distributors just yet, we do believe this is Google's first step toward providing a more robust platform for professionally produced independent content, and believe the move positions Google to act as a distributor in a bid toward capturing incremental ad dollars that are traditionally directed toward TV," DiClemente wrote.
For media and entertainment companies, over time, "this creates an emerging threat in terms of engagement, ad dollars and distribution, an incremental bidder for original content and another vehicle for consumers to circumvent the traditional pay TV model," he warned.
After all, online video advertising is the fastest-growing ad category online, and he projects it to grow 43 percent in 2011 to $2 billion.
"We believe YouTube accounts for the lion's share of these ad dollars with $1.6 billion in 2011," the Barclays analyst estimated. "YouTube is uniquely positioned here as it is by far the most watched online video property with 161 million unique viewers in September."
With its channel launches, Google "becomes a major player in independent short-form, professionally produced content, and sets itself up to be new media distribution platform and gain incremental ad dollars," DiClemente concluded.
BTIG analyst Richard Greenfield had said in a blog post on Monday that the YouTube channels are the latest premium online video offer that will compete for consumers' attention just like Netflix and other online video providers.
"We wonder if it will eventually end up being a negative for today’s leading/established content creators," Greenfield said. "The average U.S. household is watching over eight hours of TV per day, and when you start to layer in a wide spectrum of content from the Web, especially older content, we believe traditional television and movie content, especially fresh/live content, will suffer."