Google intends to use the revenue generated from the new feature, in pitching direct competition to its rival streaming services such as Netflix Inc. and Hulu LLC. The service may debut by the end of the year, said a person with knowledge of the matter, who asked not to be identified because the plans aren’t public.
“By creating a new paid offering, we’ll generate a new source of revenue that will supplement your fast growing advertising service,”
Google has been moving closer to charging users for content; the Web company introduced a subscription-style music service within YouTube in November, and has spent hundreds of millions of dollars on talent and production facilities to boost original content on the video website, which has more than 1 billion monthly viewers. With ad-free subscriptions, Google is moving closer to competing with streaming services, including HBO Now (which debuted this week), for people’s attention as they spend more time watching videos on the Web and on mobile devices.
“While we can’t comment on ongoing discussions, giving fans more choice to enjoy the content they love and creators more opportunity to earn revenue are always amongst our top priorities,” Google’s YouTube said in a statement, without commenting on the timing of the service.
YouTube will offer all the same videos without ads for a monthly fee, which hasn’t been set yet, according to the note. The service is also likely to include offline access. Google is alerting content creators because it wants them to agree to new terms that would let it include clips in the subscription product.
“We’re increasingly moving into an age where consumers are learning to avoid advertising,” said Rich Greenfield, an analyst at BTIG. “Between DVRs, Netflix and now Amazon, we’re increasingly learning to lead an ad-free life.”