In a move to combat new threats from Facebook, Netflix, Amazon, Hulu and others in the emerging video on demand industry, YouTube has snapped up original-video producer Next New Networks. The acquisition could mark the next evolution of the Google-owned property.
Next New Networks adds new weapons to YouTube's arsenal: web video production. That's significant because YouTube has so far made a name for itself by hosting user-generated content rather than producing its own broadcasts. Next New Networks exists to produce original programming and help video producers distribute -- and make money -- from their films.
Next New seems to understand the market dynamics. The company has attracted more than 2 billion views with six million subscribers. Google is paying less than $50 million for the company, according to the New York Times. But what will YouTube do with its latest technology grab?
Tom Pickett, director of Global Content Operations and YouTube Next, said Next New Networks would serve as an experimentation lab, of sorts, with the team working hands on with content partners and emerging talent on YouTube. Pickett said YouTube would leave the "actual creation of great videos" to its partners.
Greg Sterling, principal analyst at Sterling Market Intelligence, points to the original content creation aspect of the Next New Networks buy as the most proactive angle. Although YouTube says the acquisition isn't about YouTube producing content, Pickett did not mention how Google might use the technology platform.
Indeed, Sterling said this relatively small acquisition for YouTube appears to be more about helping Google indirectly develop original content by providing resources, tools and training for other producers and filmmakers instead of producing original content directly itself.
Sterling said Google could very well become more directly involved in developing original programming. One thing is certain, however: "Google is trying to make YouTube a broader content destination and evolve the service to ultimately compete with Hulu, Netflix and others that offer 'long-form' and professional programming," Sterling said.
The Threat Landscape
YouTube's Next New Networks acquisition announcement confirms Sterling's certainty. YouTube also rolled out what it is calling YouTube Next. The new team will take on the task of driving content creator development and helping YouTube content partners grow and monetize their broadcasts.
Next New Networks, then, becomes a vehicle to attract unique original programming to YouTube that works to combat the threats from the likes of Hulu, Netflix and even iTunes. Google TV has yet to take off, so YouTube is evolving even while its parent company continues trying to figure it out.
Meanwhile, YouTube -- and Netflix and Hulu -- are all facing a brand new threat from Facebook. The social networking giant just announced a deal with Warner Brothers to rent movies on the platform.
"Making our films available through Facebook is a natural extension of our digital distribution efforts," said Thomas Gewecke, president of Warner Bros. Digital Distribution. "It gives consumers a simple, convenient way to access and enjoy our films through the world's largest social network."