Google Inc (NASDAQ:GOOGL) is working on a version of YouTube that will eliminate ads but introduce subscription charges. The new YouTube service could be available before the end of 2015. The step is expected to fetch more revenue for Google from its video sharing site, but the company will also share revenue from the new service with content creators.
Google Inc (NASDAQ:GOOGL) is out to change the way it does business on its popular video sharing platform YouTube. The company is working to introduce a feature that will result a in a version of YouTube without ads but calls for subscription payment to access. The development comes when Orange SA (ADR) (NYSE:ORAN) and Vivendi SA (ADR) (OTCMKTS:VIVHY) just announced sharing stakes in Dailymotion as they seek to grow the service globally. Dailymotion is YouTube’s competitor and age mate, but with a smaller audience.
The move into video streaming subscription means that Google will directly compete for revenue and audience with Hulu LLC and Netflix Inc. (NASDAQ:NFLX).
Supplemental revenue for content creators
A letter to content creators, Google took the opportunity pitch how the paid video streaming service will supplement the income that they are already getting from advertising.
Charging YouTube viewers
Trying to charge YouTube viewers is not something that Google Inc (NASDAQ:GOOGL) is attempting for the first time. Late last year the company launched a paid music service on YouTube and the company has been investing to create original content for the paid users. Google’s paid YouTube music service charges $10 per month.
Cutting the cord
Google’s latest attempt to enhance content on YouTube and ask for payment for certain services resembles the ongoing efforts by online TV services to help people abandon pay-TV. HBO just this week launched a Web streaming service known as HBO Now on various Apple Inc. (NASDAQ:AAPL) platforms including iPhone and Apple TV.
Given Google Inc (NASDAQ:GOOGL)’s strong market position in the video sharing field, over 1 billion active YouTube users, analysts believe that the company is on the right track to generate incremental revenue. Netflix, one of the major players in the video streaming market, boasts 57.4 million subscribers and charges between $8 and $12 per month for a service that allows access to various original shows.