Content creators produce and distribute original content through a network of channels hosted on YouTube. It also helps that they can make money out of this.
Monetising YouTube videos is pretty straightforward because the options for doing so are limited. Content creators have to monetise through YouTube's Partner Program, which is essentially Google AdSense for video content. That hasn't stopped companies from joining in. These include many Indian ones too.
Mumbai-based Ping Digital Broadcast has launched what it claims to be India's first Internet high definition broadcasting network. It has 114 channels and 100 million views. There is Nirvana Digital which boasts of more than 200 YouTube channels and 50,000 videos. The network, in February, received more than one billion video views on its channels.
A multichannel network is one that operates several channels on YouTube by collaborating with content creators. There are popular individual channels like The Viral Fever, The Home Veda, All India Bakchod, Sanjeev Kapoor's Khazana, Gocricket and The TroubleSeeker Team. Sensing opportunity, traditional players jumped in, the popular ones being T-Series, Rajshri, Colors and MTV. According to the ComScore India Digital 2013 Report, video consumption in India grew by 27 per cent. With 31 million viewers watching videos on YouTube, it is the No. 1 destination.
A good concept - and strong content - is a must to begin with after one has finalised the name of the channel and set up the account. Pinakin Thakkar, director, Nirvana Digital, explains that the programming of content depends on the day or time the consumer is most likely to watch it. For spiritual channels, they plan and launch a Lord Shiva video such that it appears on Mondays, which most Hindus believe is dedicated to Lord Shiva. "On the other hand, videos on exercise, cookery and humour don't really require a specified time," he adds.
Started two years ago, Nirvana Digital Network, which consists of 314 channels, has served more than 4.8 billion minutes of videos till 2013 on YouTube alone. It also distributes content to some of the largest video platforms in the world, like HULU, Amazon VoD and Apple iTunes.
TVF-One was started by The Viral Fever Media Labs to provide 'progressive' entertainment for the youth. "The team comes up with concepts that we ourselves relate to most. The digital audience is brutal and you have to come up with the best idea to keep them glued," says Arunabh Kumar, founder and CEO of The Viral Fever.
For HomeVeda, the content strategy is defined as it is in the natural health and wellness space. Its content is further categorized into alternative medicine, diet and nutrition and plans for managing a user's health using natural and sustainable solutions "Our viewers share their health concerns for which they are looking for expert solutions. The content team then identifies and works with experts to put together all the information," says Hitesh Bhagia, co-founder, Homeveda Media Labs, which gets 65 per cent of its audience from global audiences.
Since the internet is a global medium and YouTube a global platform, one cannot really make content only for an Indian-only audience.
At Rajshri, we keep an international audience in mind when we ideate. And we diligently focus on the quality of the videos," says Kavya Krishnaswamy, general manager, content, Rajshri Media. In a chat, Rajjat Barjatya, MD and CEO, Rajshri Media says that the motive behind setting up Rajshri Media as a separate company was to have a digital footprint for the TV and production business. "We have a robust content library at Rajshri Entertainment," declares Barjatya.
Colors uses its YouTube channel to allow people to catch up on episodes that they may have missed on TV, so there is not much of a strategy in place. "Almost 90 per cent of our content is catch-up videos. The rest are some special videos done to go beyond the TV content that we offer," says Vivek Srivastava, head, commercial and digital, Colors. In terms of subscribers, the Colors channel has grown 45 per cent in the last 12 months to acquire 2.4 million subscribers.
The subscription model has caught on with Rajshri's YouTube audience leading to a 60 per cent growth in subscriber numbers annually. The channel now has 1.3 million subscribers. Similarly, Home Veda launched in mid 2012 has grown its subscriber base to more than 286,319 subscribers.
TVF launched its YouTube network in February 2012. Exactly a year later, it had around 60,000 subscribers. Two years after the launch, it had roped in half a million subscribers and, at present, is close to a million subscribers. A YouTube channel would seem to be a better, less expensive proposition compared to setting up a satellite TV network.
Money and resources
The costs may be low, but it is not easy for someone who is not familiar with television formats or programming to get into the YouTube format that is similar to TV. "Like any television format, we look for what we believe consumers are missing or likely to consume," states Prashanto Das, founder and CEO, Ping Network.
Individual creators or small teams (two to three people) can start a YouTube channel with little money and resources. Someone like YouTube singing sensation Shraddha Sharma can get started without any, or very little, money - all one needs is a webcam or mobile phone camera.
For a bigger, professional outfit, the first requirement is a competent team with a clear understanding of digital content. "Decent infrastructure, access to a shooting floor, recording studio, HD cameras and good lighting equipment are pre-requisites. Production costs can range between Rs. 5,000 and Rs. 50,000," says Krishnaswamy of Rajshri. Srivastava believes that cost of producing a high definition 15-minute video on YouTube might range from Rs. 50,000- Rs. 50 lakh depending on the type of content.
"A Mughal-E-Azam can't be produced at the cost of a Bheja Fry, though both are feature films. Its the same with online content," says Kumar. Now that YouTube has become a massive pool of videos, one needs to invest in sharply focused promotions as well. Rajshri uses the YouTube Fan Finder to get to its target audience. It also interacts with fans and subscribers through Google Hangouts and YouTube Live chats. "It's important to monitor audience reaction and comments they leave," adds Krishnaswamy.
Return and risk
A recent report from eMarketer says that YouTube is expected to earn more than $5.6 billion in gross revenue by the end of 2014. That number is impressive - a 51 per cent jump from last year - especially when compared to the 18 per cent growth for television.
INSIDE THE TUBE
Creating a channel on YouTube doesn't cost anything. However, creating videos for these channels might involve some investment, depending upon the kind of video being made. The proliferation of smart phones and affordable digicams has greatly brought down the cost of making a video. YouTube provides a lot of free video editing tools online which can be used to make a decent quality video for the platform.
YouTube channels are monetised through the YouTube Partner Program. This initiative is YouTube's way of sharing ad revenues with its most popular and successful video creators. The moment one signs up (with a Google account) and becomes a YouTube partner, ads start getting displayed in the form of pre-roll videos or annotation banners. The brands and advertisers pay YouTube, which takes 55 per cent of the revenue from the content creator or channel partner. For every 1,000 views, the partner gets around Rs 100-300, depending upon the amount paid for by the advertiser to YouTube.
There is also an option called the 'Fill Rate'. If a video gets 1,000 views, it does not necessarily mean that all of those 1,000 views may have a pre-roll ad playing. If YouTube sets a Fill Rate of 50 per cent, only 500 views will have ads on them. Payouts happen at the end of every month.
"YouTube pays millions of dollars a year to partners. We have very successful partners in India - from large studios to start-ups," says Gautam Anand, director, content partnerships and operations for APAC, YouTube. But are they profitable?
Ekalavya Bhattacharya, head of digital for MTV India, explains the math. Imagine a video that is aiming for one million video views. A campaign to get one million video views will cost Rs. 2.5-3 per click. Usually, a channel first looks at buying 2-300,000 views through ads and rely on them to spread the word and reach the 1 million mark. So, the channel ends up spending Rs. 8-10 lakh while promoting a video. "Remember, one may not be earning any money on video views initially," says Bhattacharya. How does a channel cut its losses?
TVF-ONE, for one, has a platter of activities like branded content, live shows, production services and TV show production. A case in point is the channel's 'Chai Sutta Chronicles', sponsored by CommonFloor.com. The channel has tied up with SnapDeal.com as sponsors for other videos.
Brands want to be a part of user stories and discussions. Being associated with the content their users consume is the best way they can achieve this. They can also measure the effectiveness of their campaigns and be sure of who their audience is. A 60-million strong audience (unique users) makes YouTube an attractive destination.
Says Anand of YouTube, "Nearly all leading advertisers turn to YouTube to extend the life and reach of their TV spots. Our TrueView format, in which advertisers only pay for ads that users watch, is a hit. Now, more than 75 per cent of ads that appear in videos are 'skippable'. Globally, spends on display and YouTube by manufacturers of consumer-packaged goods has grown over 75 per cent in the past two years. "Advertisers can select relevant content for their respective TG. For example, one million views on YouTube can be targeted precisely without the spillover that is associated with TV," points out Mayuresh Mumbaikar, senior director, Mindshare. Much of the advertiser's interest depends on the kind of content a channel produces. The Tata Nano Drive with MTV, for instance, is backed by Tata. "Likewise, Airtel sponsored the current season of SplitsVilla on digital, but not for TV. MTV had a digital show called the Unmasked, which dealt with controversial content and we didn't get any advertising. Controversy drives views, but it also drives advertisers away," adds Bhattacharya of MTV.
Though YouTube results in additional revenue, the problem is that there is no demarcation between premium and non-premium content. "Though most of our videos are repeats from TV episodes, we also produce a host of YouTube-only premium content. But YouTube doesn't have a premium price for content creators. This needs to be addressed," suggests Srivastava.
Challenges and opportunity
Localisation of content is the biggest challenge in India. It is important to create homegrown content that appeals strongly. According to data from YouTube, there are over 10,000 Indian films on YouTube with 20,000 hours of TV content in six languages (Hindi, Tamil, Telugu, Bengali, Gujarati and Punjabi). Add to this, 250,000 songs and content in eight languages - including live events for sports like cricket, music festivals and awards ceremonies - and it is testimony to the presence of regional content on YouTube.
To many, it's an opportunity than a challenge. "We have six regional language channels and are planning localised channels for food, kids content, music, lifestyle and other verticals," informs Krishnaswamy. But because of the massive content that YouTube hosts, it is difficult for an independent content creator to promote his content through paid promotions and find an audience. Recovering production and marketing costs from YouTube ad revenues is a challenge.
Kumar wants a higher CPM and fill rate (see box), so that revenues go up. "The other issues," he says "are the ever-changing API (application program interface) and algorithm of YouTube, which affects views, subscribers and traction. Also, Indian audiences are too passive - sometimes, they go through 20 videos before deciding to subscribe to your channel."
Monetisation of videos on mobile platforms is another issue. Some handsets do not support video ads. Many long format videos don't work seamlessly on YouTube becaause of poor bandwidth. As the platform evolves, the audience will evolve too and start consuming - and sharing digital content - more than they do Saas Bahu serials. This is where independent content players could score over the traditional TV and film studios.
A Note From the Editor
Some years ago, as internet penetration and bandwidth in India began to improve, video consumption saw an upsurge. So too did YouTube's popularity. I remember some investors getting excited by the idea of a content play on YouTube. Here was an enormous platform that could be used by content creators to create 'channels' of interest, they reasoned. The age of video content, as opposed to the written word, seemed to have arrived online.
In the last couple of years, there have been several attempts in India by entrepreneurs to upload videos in a systematic way and create channels of specialised interests to draw niche audiences. There are isolated instances of individuals uploading videos, operating on low costs, generating a good following and making money. When it comes to organised attempts on YouTube, however, the efforts have not been financially rewarding. No wonder then that investor money to create content has been scant.
It requires a special talent to make money off content online. The problem on YouTube is the same as elsewhere on the internet: lousy ad rates because of a surfeit of inventory. A bunch of content creators are nevertheless trying to create stuff for young Indians that television does not provide. Some are trying out 'native advertising' (entertaining advertising videos that pass off as content) to supplement the limited revenue that YouTube earns them.
These independents have to contend with competition for the same rupee from videos uploaded by Indian television broadcasters to whom anything they get from YouTube is supplementary income - at no additional cost.
It is an uneven battle but as online video consumption gallops, broadcasters are beginning to worry about their primary business being hurt by YouTube. Several large broadcasters have set up their own portals where viewers can catch up with their favourite shows. It will develop into the classic creator vs aggregator battle: broadcasters vs YouTube and others.
Broadcasters may soon have to suffer the same pangs as print publishers have with the rise of online content consumption.