March 5, 2010

YouTube Talks Change to Cable

At yesterday’s Cable Congress in Brussels, an executive for Google-owned YouTube flew the banner of social media but said there were several obstacles to expanding YouTube’s presence on the TV set.

Europe, Middle East and Asia (EMEA) Director of Video Partnerships for YouTube Patrick Walker said that the video that his company aggregates and hosts fits the times.

“At no time in history have people been more connected in a one-to-one or one-to-many way,” Walker said.

The few embedded applications that have enabled YouTube on the TV set to date, however, lack scale. That’s one challenge. The lack of motivation among those with Ethernet-enabled TV sets to use any kind of connected functionality is another obstacle. (For a report on similar findings, click here.) Then there is the revenue question.

While YouTube generates revenue—it is expecting to become profitable in 2010, Walker said—its method of doing so doesn’t translate into a television world lacking the Web’s established advertising infrastructure.

This all makes it doubtful that the existing, closed model for delivery of television can accommodate YouTube and its 300 million unique viewers. “User expectations are getting too high for walled gardens,” Walker said.

What kind of change?

Walker’s larger theme was that of the unprecedented changes in video consumption that his company has helped catalyze. “The pace of change is actually quite scary, or a great opportunity depending on your perspective,” he said.

In the following panel discussion, Virgin Media CEO Neil Berkett agreed that change was imperative. “If you stay with yesterday’s business model, you will die,” he said.

Moving toward a device that allows consumers to take whatever content they like should enable cable operators to embrace over-the-top content, Berkett suggested. (For more talk on such a device, the IP-enabled gateway, click here.)

But he added that walled gardens—controlled content portals—would linger. “What you don’t want to do is confuse the consumer,” he said.

To that end, he said Virgin was adopting the TiVo user interface, well known for being an effective personal content catalogue. One portal that concerns him, however, is that of the BBC.

“I struggle when government-funded operations become gatekeepers,” he said.

The COO of Kabel Deutschland, Manuel Cubero said that the interests of YouTube, on one level, aligned neatly with his operations in Germany, where cable high-speed data services generally are much faster than the telco competition.

One thing that consumers need is throughput. “If you love Over the Top, you have to come to KDG,” he said. “We’re participating in that (demand) with a very intelligent pipe.”

Opportunities for further alignment down the road remain to be explored, he added, referring to capabilities enabled by the DVB-C specification.

YouTube channels?

As examples of more engagement, YouTube’s Walker had listed several examples of content providers establishing their own presence in the YouTube ecosystem. Once the Olympics were over, for instance, NBC launched a YouTube channel.

Walker also noted the collaboration between YouTube and the show, “Britain’s Got Talent,” which led not only to 200 million views of Susan Boyle’s startling debut, but also higher viewership of the show itself and a strong subsequent impact on sales of Boyle’s first recording.

Less eager to embrace the idea of establishing YouTube as a channel is HBO, which recently launched its own HBO Go portal for existing subscribers. Linda Jensen, CEO of HBO Central Europe, insisted that “premium” was not just a label.

“The user experience that reflects the premium…needs to be moved down the pipe,” she said. “Extremely important to us is the fact that customer has to be serviced.”

–Jonathan Tombes