YouTube, which was bought by Google in 2006, has been in talks with Hollywood studios for more content for Red, but it’s unclear what that would include. YouTube declined to comment on what it called speculation.
That hasn’t stopped Netflix from encroaching into YouTube’s territory. The Los Gatos, Calif., company recently signed a deal with YouTube star Miranda Sings. A year earlier, another YouTube personality, Freddie Wong, sold his RocketJump series to Hulu. A successful showing by Red could help retain some of those YouTube stars, some of whom were paid bonuses not to jump ship.
“We calculate that even a low single-digit percentage rate conversion from free ad-supported to paid subscription will allow Google to monetize users at 10 times the annual [revenue per user] versus that derived just from advertising,” wrote analysts at Credit Suisse in a research note.