YouTube exec shifts strategy on streaming
Four years ago, veteran TV executive Susanne Daniels was asked to build a set of original programs that would leapfrog YouTube into a prominent company in the subscription streaming marketplace, competing with the likes of Hulu and Amazon Studios.
Now, the online video giant is turning away from that strategy. Original programs, once largely behind a paywall, will become free, supported by ads by 2020. And the Google subsidiary is scaling back its investment in original scripted programming, focusing more on productions centered around YouTube stars, celebrities and musical artists.
The shift is about knowing your audience, says Daniels, YouTube’s head of original content.
“We’re zigging where other people are zagging,” Daniels said in an interview at the former
Spruce Goose hangar in Playa Vista. “Part of the way we’re thinking now is, ‘What can only be done on YouTube?’ ”
Analysts cite several factors behind the change, including the high cost of developing scripted shows and increasing competition from Netflix and Amazon. Disney, Warner-Media and Apple will release their own subscription services this year or next, and some companies are making adjustments.
“It’s going to be a fight for the wallet share,” said Eunice Shin, a partner at Prophet, a marketing consultancy. “YouTube probably had to ask themselves, are they going to be able to create enough and fund enough original content to be competitive?”
Daniels said part of the impetus to move its productions out from behind the paywall was advertisers that are eager to place ads with premium, professionally produced content. Advertisers have put pressure on YouTube to restrict hate speech and inappropriate videos on its site.
YouTube already has a large global audience — people watch more than a billion hours of video on the service each day. YouTube estimates it draws more than 1.9 billion viewers a month.
The catch is that most watch that content — with ads — for free, making it difficult to persuade them to join a subscription service.
With so many subscription streaming services out there, Daniels said, YouTube decided to focus on what it does best. “Our core business is outstanding and successful, and really, the No. 1 global video platform. So why not take advantage of our strengths?”
The new strategy has fueled speculation that Daniels may be looking to leave YouTube. But she told Bloomberg in March that she is committed to remaining at the company.
Daniels, 54, was already a seasoned TV executive when YouTube tapped her in 2015 to build its production pipeline.
Growing up in Westport, Conn., Daniels would watch “L.A. Law” with her father, an attorney. One night her dad lamented that a scene in the show depicting a judge was inaccurate.
“A light bulb went on, and I was really attracted to the idea that you could reach a large audience and tell whatever story you wanted to,” Daniels said. “I just always loved the creativity that went into creating content.”
Daniels started her career as an assistant for “Saturday Night Live” creator Lorne Michaels before landing executive roles at MTV, Lifetime Networks and the WB. She championed hit shows including “Buffy the Vampire Slayer,” “Army Wives” and “Dawson’s Creek,” as well as MTV’s reality series “16 and Pregnant.”
She became interested in YouTube when she saw billboards featuring YouTube creators (and their large number of followers) on her drive to work, leading her to research and, later, ink deals with some of them.
Daniels jumped at the chance to join YouTube in 2015.
Her original task was to market a subscription service called YouTube Red. The service, now known as YouTube Premium, charges about $12 a month for adfree video and music streaming. For $50 a month or so, viewers can subscribe to YouTube TV, which offers live programming from more than 70 networks along with YouTube Originals.
Under Daniels, the company spent hundreds of millions of dollars last year on original productions and has approved halfhour comedies and dramas with budgets from $400,000 to $1 million, people familiar with the matter said. This year, the company expects to have more than 50 original productions, about the same as last year.
In June, it opened two large soundstages in the historic Spruce Goose hangar complex, near Loyola Marymount University, for its original productions. It wasn’t part of Google’s original vision for the property, but Daniels seized the opportunity when she was asked if her team could use the space. The two soundstages are named Orville and Amelia after aviation pioneers.
Popular original series have included “Cobra Kai,” about what happens to the main characters from the “Karate Kid” film decades later. The first episode of the show’s second season drew 20 million views in just six days.
While “Cobra Kai” drew interest from other companies, Daniels championed the show even before seeing a script, said actor Ralph Macchio, who portrays “Karate Kid” Daniel LaRusso.
“Susanne Daniels would not let it go,” said Macchio, a coexecutive producer. “She just felt that this was the one she was looking for to make a big splash.”
Though “Cobra Kai” has been a success, other scripted shows failed to gain much of a following. Several series never made it past the first season.
Daniels said her team is spending less on original productions this year than previously, but she declined to disclose budget figures.
The veteran TV executive acknowledges that developing shows for a site that gets more than 400 hours of videos posted every minute is far different than deciding what to play on a network.
Last month, the company announced its upcoming slate, including “Cobra Kai” and three other returning shows. The new series include three musicrelated specials, five shows related to learning, three documentaries and an interactive special with YouTube creator Mark Fischbach that will let viewers choose the decisions he makes in a museum heist, similar to “Black Mirror’s” interactive film “Bandersnatch” on Netflix. The lineup will also speak to global audiences, with one of the music specials focused on Latin music star Maluma.
Kevin Beggs, chairman of Lionsgate Television Group, which produces the YouTube original series “Step Up: High Water,” based on the popular movie franchise, says YouTube’s new approach makes sense.
“The evolution that they’ve made has been completely based on responding to their audience,” Beggs said. “Compared to the oldschool way of waiting for Nielsen to give you some feedback, they really know what’s working and what isn’t,” and ae not afraid to make changes.