YouTube will offer paid subscription channels over the next few weeks, people with knowledge of the matter said, expanding the choices for television viewers beyond traditional pay-TV packages.
Each channel will cost about $1.99 a month, with some variety in price, said one of the people, who sought anonymity because the plans aren’t public. The platform will help programming partners generate revenue beyond advertising and one-time rentals of movies and TV shows, YouTube said yesterday in an e-mailed statement.
“We’re looking into creating a subscription platform that could bring even more great content to YouTube,” the company wrote, without discussing specifics.
With paid YouTube channels, Google would join Netflix Inc. (NFLX), Hulu LLC and Amazon.com Inc. (AMZN) in offering an online alternative to traditional pay TV. Fees could provide YouTube and its suppliers with a supplement to advertising revenue to help pay for more expensive productions, and broaden options for viewers outside of cable or satellite services.
“Google feels comfortable with its market position and the user for this to be something that they would want to pursue,” said Scott Kessler, an analyst with S&P Capital IQ who rates the stock a buy and doesn’t own it. “Google wants to present a more professional outlet for these folks.”
Google, based in Mountain View, California, added 1.9 percent to $861.55 yesterday in New York. The shares have advanced 22 percent this year.
Subscription channels may help make YouTube a more exclusive destination for viewing online video, though they aren’t likely to have a big financial impact, said Kessler.
“This is more about strategically positioning Google and YouTube,” Kessler said.
Subscriptions may also provide YouTube a better path to generating revenue outside the U.S., where it can be more difficult to boost ad sales, according to Brian Wieser, analyst at Pivotal Research in New York.
“In a market like India or Indonesia, the costs to deliver content may be just as high as they are in the United States,” Wieser said. “But the opportunity to generate revenue is far, far lower, if you’re solely dependent on advertising.”
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