YouTube Hopes To Reinvent Itself With Live Streaming

YouTube will undertake one of the most ambitious projects in its history. The largest video website in the world will begin to test live streaming of content. In its  blog, the Google Inc. (NASDAQ:GOOG) site said “From U2 to the Indian Premier League to the White House to E3, we’ve worked closely with our partners to give you a front row seat to a wide array of live events. Today and tomorrow, tune in as we open a new chapter of YouTube live streaming.”

YouTube was set up as a site were video could be posted for download and streaming, but none of that streaming has been live. In an effort to being in more revenue, the business has begun to add video advertisers from major marketers and premium content including TV and films. YouTube is no longer just a home for grainy, amateur video, although many of the most popular features on the site are still short, user-created segments. But, music videos are now YouTube’s second most popular content.

YouTube is expected to have revenue of $450 million this year, which is modest given that it carries about 80% of the videos viewed in the US. It has always needed a breakthrough product to increase its appeal.  Media companies will continue to stream events themselves over their websites but can rely on YouTube as a second distribution channel for everything from concerts to news to sports.

YouTube has always offered a huge number of “channels” of both premium and live content. But, sites such as Hulu, created by content companies to offer their own products, have largely taken that opportunity away from YouTube.

With live streaming, YouTube should be able to become the dominant force in presenting live events. And, with that it will almost certainly become a key partner to major media firms. Its piracy conflicts with large content providers including its legal battles with Viacom Inc. (NYSE: VIA) will recede very quickly from memory.

Douglas A. McIntyre