YouTube is set to show clips from channels such as CNN, the Cartoon Network and TNT after striking a deal with Time Warner, which will sell ad space alongside the clips and share the revenue with Google.
?Working with YouTube, we expect to improve our ability to monetize this short-form content through new and creative advertising initiatives,? claims Time Warner CEO Jeff Bewkes.
Excerpts from shows such as Gossip Girl and the Ellen De Genres Show will be made available on YouTube alongside news clips and film content. Though the deal currently only allows YouTube to run short-clips, both partners say they are looking at expanding the deal.
?This partnership with Time Warner will provide our community with some of the most popular video content produced,? says YouTube co-founder and CEO Chad Hurley. "We hope to build on this deal and look forward to a long and productive relationship.?
The Time Warner deal is part of Google’s attempts to use premium content to attract advertisers who are wary of running ads alongside YouTube’s user-generated videos. Google has already struck deals with Disney and Sony to show clips of their content.
Though Google does not breakdown YouTube’s finances separately from its own results, the video network is thought to lose upwards of USD200m. However, Google CEO Eric Schmidt recently hinted that YouTube may be performing better than many Wall Street analysts believe.
Making money from short-form content seems to be key to YouTube’s success, but Analysys Mason analyst Cesar Bachelet doubts the returns are high. ?I think that Warner and YouTube are dipping their toes in the water, whilst sharing the risk and eventual rewards through a revenue share arrangement?, he says.
?Whereas the case for advertising on long-form content can be proven, i.e. consumers willing to tolerate advertising in order to see something perceived as having a certain value either for free, or at a reduced cost, I am not sure how well it will translate to short clips. Typically, short clips are used to entice people to access the full-length version of the content, which can then be monetised through various methods?
StrategyEye's related categories: Online Video, Video Networks
StrategyEye's related companies: Time Warner, Google, YouTube
