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What Does YouTube’s Future Hold?

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It’s hard to believe, but YouTube is now more than a decade old. Back in 2015, when YouTube officially celebrated its 10th anniversary, the biggest tech blogs were full of stories referencing “10 more years of video domination” by YouTube. The basic sentiment was that YouTube was so dominant and so ubiquitous in the world of online video, that it was impossible to imagine any type of upstart taking over YouTube’s top position.

But flash forward to 2017, and it’s not so obvious that YouTube is the undisputed video king. You have serious inroads being made into live streaming by the social media giants (Facebook with Facebook Live, Twitter with Periscope), you have the creation of all kinds of new streaming video business models made possible by the likes of Netflix and Hulu, and you have the inevitable risk of a disruption to the video market that we haven’t even considered today (maybe 360-degree videos and the rise of virtual reality as a new way of watching video).

That being said, YouTube is still the home of the internet’s video creators — and that’s mostly because YouTube rewards its top creators very lavishly. If you’re a top YouTube video personality – someone like the gamer-comedian PewDiePie – you can expect to clear more than $1 million annually from views of your videos. That’s one area where YouTube has a massive head start on any other video rival – the ability to pay its creators.

Say, for example, you’ve embraced the whole Facebook Live platform and have begun to “live broadcast” bits and pieces of your life. Every time you go on camera, your Facebook friends get updates that you’re “live,” and they may tune in. But who is paying you to do this? Nobody — at least not yet.

Live streaming from mobile devices

If you listen carefully to what Facebook CEO Mark Zuckerberg has been saying recently, he’s been playing up the potential of Facebook Live and the internet’s embrace of the point-and-stream phenomenon. Think about it — video platforms like Instagram, Snapchat, Periscope and Facebook Live are designed for the mobile guy (or gal) about town, who spontaneously decides to live stream a concert taking place in the park, or a few stadium scenes from a football game, or maybe just your kid taking his or her first steps in life. It’s raw, authentic and unscripted. And people aren’t capturing those moments on YouTube, which is becoming much more of a scripted video reality.

Everyone wants to be a cable company — except the cable companies

Another interesting trend important for YouTube is the growth of massive niche video networks to take on the traditional cable networks. In fact, that was the original plan of YouTube – to create a huge long tail effect of niche content channels, see what works, and then relentlessly promote the most popular channels as part of a cable TV alternative.

That strategy eventually evolved into the whole YouTube Red experiment, in which the company essentially bundled all its premium content creators and told people they’d have to pay a fee to access all that great content. The good news, however, was that you wouldn’t be forced to watch all those annoying ads that typically precede, follow and interrupt any YouTube video.

But now YouTube is taking a different tack. In February, the company announced that it was going to launch a $35 per month live TV streaming service called YouTube TV. The basic premise was simple — the company would offer a “skinny bundle” of the top cable networks and charge people $35 per month. Essentially, you would be getting “cable lite” with fewer networks, but also a lower cost than you’d pay for a regular cable TV subscription. So is that an admission that the YouTube Red experiment is essentially over, and that the only thing people will pay for these days is mainstream (professionally produced) cable content?

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The race for the global audience

Many of these trends are on most obvious display in the U.S. video market, where most people have fast broadband connections, powerful smartphones and a seemingly infinite appetite for LOL cat videos. But what about in the rest of the world? As YouTube’s management team explained back in 2015, the goal was to make it possible for anyone in the world – no matter what type of internet service they had – to be able to watch YouTube videos. The goal was simple: make YouTube content available to as many people and as many devices as possible. More views equal more ad dollars, right?

But it’s not so clear that YouTube is going to be the undisputed global leader. There are plenty of other companies that are looking to make inroads, including Netflix. In 2016, Netflix announced an ambitious plan to take its content into 130 countries around the world. And Netflix wasn’t being shy about throwing around cash – it has been investing tens of millions of dollars to create high-end, original content. So what does the rest of the world want to watch – silly cat videos or professionally-produced studio content?

New technological disruption

Looking ahead to the future for YouTube, it’s clear that a number of possible technological innovations could change the way people consume video. This would represent a far graver threat to YouTube than just people opting to go to a competitor – it would challenge the very essence of what it meant to experience video online. That’s why YouTube has been particularly innovative when it comes to embracing video in all its different formats – video filmed by drones, video filmed by GoPro cameras, video filmed with 360-degree cameras – it just doesn’t want to be left behind.

But what if people decide one day en masse that they’d prefer to strap on a virtual reality headset and experience video in a new way? It would appear that, here too, YouTube has been hedging its bets. Well, not YouTube directly – but Google, which owns YouTube. In 2016, Google introduced the Google Daydream VR headset. So if people decide to start watching videos with headsets, YouTube might still be able to recover, as long as people want to use the Google Daydream.

Or what about the growth of 4K and 8K video? We’ve already seen how people have raced from 720p to 1080p and now to 4K. At each step of the way, YouTube has also raced to keep up, working harder to make sure that all YouTube videos can be enjoyed in their full resolution on any digital device.

Conclusions

Thus, it’s hard to really imagine anyone knocking off YouTube overnight. Facebook could try to mount a challenge from the low end of the point-and-stream video segment, Netflix could try to mount a challenge from the high-end original streaming content market, but what about everything in the middle? Just as YouTube has successfully warded off strategic threats for more than 10 years now, it looks to be particularly well-positioned to deal with its video rivals over the next decade.

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