Google To Fund Movies, Youtube Channels To Stay Relevant

Netflix, Hulu, Roku, HBO Go and specialist sites like Vevo are all taking a chunk out of Youtube, the once massive online video website. Even Facebook and industry laggard Yahoo are getting a piece of the action.

In a move to stem the flow of content producers switching channels, Google Inc.’s YouTube will directly invest in new shows to be launched in partnerships with its four top content creators, it said in a blog on Tuesday.

The move would see it copy a strategy employed by industry heavyweight Netflix and others such as Amazon and Yahoo.

The world’s No. 1 online video website also said it reached an agreement with DreamWorks Animation SKG Inc. unit AwesomenessTV to release feature films, sometime within the next two years.

The partnerships help YouTube, which turned 10 years old last week, secure higher quality advertising as it transitions from a repository home videos to a site with more polished content.

YouTube has been competing to lure more premium video advertising in order to boost margins as overall prices for Google’s ads have been declining.

While the website attracts more than 1 billion unique visitors a month, far surpassing those of Netflix Inc. and Amazon Inc., it makes considerably less of these users than its rivals with higher quality content.

Google did not disclose how much it was investing or how the partnerships would be structured. Knowing Google the structures are likely complicated and are more of a test than a completely new initiative.

The investment marks a significant change in strategy for YouTube and reflects the economics that advertisers want brands associated with high quality, desirable, content rather than homemade movies.

YouTube and AwesomenessTV, a channel aimed at teens and younger adults known as millennials, expect to roll out their first film this fall.

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