Several media outlets including the LA Times, are reporting that NBC (GE) and News Corp are setting up their own video distribution operation as a way to by-pass YouTube (GOOG). The new venture would collect content from major media companies and license it to large sites that may include Yahoo! (YHOO), AOL (TWX), MSN (MSFT), and MySpace.
The plan is cumbersome and complex making it unlikely to work. Sites like Yahoo! already have a large store of video content and a huge number of other channels, so making content from major media companies stand out will be very difficult. The same holds true for the other large web portals that the venture will target for distribution. Many of their other channel make large sums of money, so driving traffic to a section with video from TV networks is unlikely to be economic for them.
If the large media companies do not make peace with YouTube, they could spend millions of dollars and countless man hours trying to replace a model that already has tens of millions of users and hundreds of millions of videos viewed.
If you can’t beat ’em, join ’em.
Douglas A. McIntyre
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