) Executive Chairman Eric Schmidt is sending a powerful message
to TV networks, pay-TV services and anyone else in the
traditional television industry: your days could be numbered.
According to the
, Schmidt gave a presentation last night to woo advertisers and
persuade them to buy ad space on YouTube.
During the presentation, he discussed whether Internet video
could displace TV watching. "That's already happened," he said
(as quoted in AP).
YouTube receives one billion unique visitors/viewers per
month, which is certainly higher than every TV network in
existence, and might very well be higher than every network
combined. Schmidt is confident that the site will continue to
grow and eventually reach six or seven billion people
Google has been spending millions of dollars to ensure that
YouTube becomes the world's number-one destination for video
entertainment. The company reportedly offered
to lure content creators.
Famed Nickelodeon and WB executive producer Brian Robbins was
reportedly offered a
$5 million grant
from YouTube to get his site, AwesomenessTV, up and running.
After gaining another $3.5 million during a Series A round of
funding, Robbins sold the company to DreamWorks (NASDAQ:
) for roughly $33 million.
According to the
, "The deal includes the possibility of additional cash payments
of up to $117 million if certain earnings targets are reached in
2014 and 2015."
That's not a bad return for a small company that used an
online video site as its initial form of distribution. Looking
ahead, AwesomenessTV hopes to have a television show on the
network it threatens to replace: Nickelodeon.
That being the case, however, investors may wonder if Schmidt
jumped the gun in announcing that Internet video has already
YouTube's goals are the same as every TV network: to sell ad
space. If YouTube begins to charge an
for new or existing channels, the site will transform into
another pay-TV service. Twenty years from now, it may be no
different from a pay-as-you-go version of Comcast (NASDAQ:
), Time Warner Cable (NYSE:
) or Dish Network (NASDAQ:
). If it keeps growing, however, YouTube could be much
Internet videos are gradually creeping their way into the
living room as more users access Netflix (NASDAQ:
), YouTube, Hulu and other streaming video sites. Netflix's most
popular videos are TV shows, most of which came from traditional
Even so, most TV shows are still watched the old-fashioned
way. Thus, Schmidt may have jumped the gun in making his
statement -- particularly in reference to YouTube.
While YouTube can get 7.5 million people to
watch a guy pick his nose
, it has yet to become the dominant source for full-length
sitcoms, dramas or major sporting events. Until it does, YouTube
cannot hope to displace anything.
Louis Bedigian is the Senior Tech Analyst and Features Writer
of Benzinga. You can reach him at 248-636-1322 or
louis(at)benzingapro(dot)com. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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