Google Inc. is stepping up its march to become a full-service entertainment destination with its YouTube TV service, which will enable subscribers to watch live feeds of top television networks for $35 a month.
With its new offering, Google is taking direct aim at traditional television operators by designing a service that appeals to younger people who consume much of their entertainment on smartphones and who already spend countless hours watching YouTube videos.
“There is no question that millennials love great TV content, but what we have seen is they don’t want to watch it in the traditional setting,” YouTube Chief Executive Susan Wojcicki said at the company’s Playa Vista campus. “They don’t want to watch it with their families sitting in the living room waiting for their favorite show to come on.”
Google will join an already crowded field of Internet TV services that includes Apple TV, Sling TV, Sony PlayStation Vue and DirecTV Now. The popular online video site Hulu also plans to launch its own “skinny” bundle of traditional TV channels within a few months.
“This is partly a defensive move,” said James McQuivey, a media analyst with Forrester Research. “If you are Google, then you don’t want to stand by and watch the satellite-TV guys take this opportunity for themselves. If [Internet TV] going to happen, then Google wants to make it happen.”
YouTube’s name recognition and Google’s technology and deep pockets could give its service a competitive advantage. The company has designed a sleek interface for its app to enable subscribers to record a show with a tap of a button. Its cloud-based DVR allows unlimited storage of TV shows or ballgames.
Google’s announcement underscores how far the Internet search giant has come in forging partnerships with Hollywood’s leading players. A decade ago, the big networks slammed their doors when Google tried to coax them into a relationship.
“The whole reason that some of the broadcasters formed Hulu was to shut down the threat of YouTube,” McQuivey said. “Back then, in 2008, the TV networks said: ‘There is no way we are going to enable you, this rising superstar, to get into the TV business.’ ”
Studio chiefs were then loath to turn over their valuable TV programming out of fear that their businesses would be ravaged, much like the newspaper and book publishing and music industries have been.
But times have changed. The networks’ longtime partners, pay-TV distributors including Dish Network, DirecTV and Charter Communications, have witnessed an exodus of customers who have cut the cord or opted for a lower-cost “skinny” bundle of channels. Younger consumers — those under 35 — seem less inclined to sign up for a fat bundle of cable channels, and Google has tapped into that audience in a big way.
Company executives did not specify when YouTube TV would launch, but said it would be sometime in the next few months.
Subscribers will be able to stream shows on their phone or Internet-connected TVs through the YouTube app. One monthly subscription will allow six users to share a single account, a feature that is likely to please cash-strapped 20-somethings. YouTube TV will also have a cloud-based DVR to enable users to record and keep an unlimited number of shows.
The announcement had been widely expected. A Google TV service has been on the drawing board for nearly a decade, with engineers in San Bruno and Mountain View, Calif., spending the last two years perfecting the version that will launch in major U.S. cities.
CBS was one of the first major broadcasters to sign up for the service in October, and other networks and channels followed suit. In addition to the major networks, the service includes the Weather Channel and the various cable channels owned by NBCUniversal, Walt Disney Co. and 21st Century Fox. Spanish-language Telemundo also will be part of the service as well as the Weather Channel’s Local Now, a news, traffic and weather offering for some local markets.
However, cable channels operated by Time Warner Inc. — including HBO, TBS, CNN and Cartoon Network — Viacom Inc. and Scripps Networks are not part of YouTube TV.
The new service reflects a larger strategy by Google and YouTube, the world’s dominant video site, to become a bigger player in the mainstream TV business.
“This is part of the continuing evolution in how people think of YouTube,” said James Dix, a media analyst with Wedbush Securities.
In 2015, Google launched the commercial-free service called YouTube Red for $10 a month. The company said in February that it was introducing its own slate of original TV shows aimed at children and families, expanding the roster of original productions from YouTube Red.
With rising competition for eyeballs, YouTube can no longer rely on amateur videos to generate traffic and advertising revenue. So the video site has begun investing in and distributing original shows targeting young viewers — starting with teens and young adults — who are increasingly bypassing traditional television and movies.
Still, the most-viewed YouTube clip in 2016 was CBS’ late-night talk show host James Corden’s “Carpool Karaoke” session with music superstar Adele, Wojcicki said. The clip was viewed more than 150 million times on YouTube. Oscar clips generated more than 33 million views, executives added, on par with ABC’s television audience on Sunday night.
YouTube TV probably won’t be a huge moneymaker for Google — at least in the beginning, analysts said. However, the company will be able to glean insights about how young consumers watch live TV, including sports.
Top sports networks, including ESPN, Golf Channel and Fox Sports, will among the channels offered.
“The issue for the TV industry is how do you get some of the people back in the pay-TV system — but Google doesn’t care about that,” Dix said. “It’s not going to be Netflix or revolutionize the TV viewing experience, but it is a way for Google to get in the game.”
YouTube has a potentially vast audience — worldwide, its viewers are now watching more than 1 billion hours of video a day. But its foray into television faces hurdles, analysts said.
YouTube has long been associated with free content, so convincing younger customers that they should pay for entertainment could be a challenge. It’s also playing catch-up with more established players like Netflix and Amazon and, so far, lacks premium channels that are hugely popular, such as HBO.
"They are going to struggle to get younger people to pay. But the middle crowd, people in their 30s, have spent enough time watching Netflix for 10 bucks a month, and Amazon … so they might have concluded that getting access to these top shows is worth it," McQuivey said. "And they have more money than people in their 20s."