Thursday, 15 October 2009

Channel 4 You Tube deal

There were strong rumors last week and these have been confirmed by MediaGuardian today. A landmark deal between the UK commercial broadcaster, Channel 4 and You Tube - For You Tube to host C4 programs shortly after broadcast.

The deal, that was 6 months in the making with both parties sharing the revenues generated You Tube via an 'agreed formula', see C4 will make its existing online video 4oD catch-up service available via YouTube shortly after shows have aired on TV.

Both parties have signed up for an initial 3 year period and C4 content will become available on the Google-owed site early in 2010 (in the UK it only appears to protect foreign rights revenues C4). Regular and new series such as Skins, Peep Show and Hollyoaks will be joined by 3000 hours of archive programming including shows such as Brass Eye, Derren Brown and Ramsay's Kitchen Nightmares.

So why the deal, and why now?

Well, Channel 4 have been in a tight spot revenue wise (like all UK commercial broadcasters) for some time as advertiser demand falls while audience remain static. So while the debate about C4 taking a share of the BBC license fee rumbles on, they are forced to look for other revenue sources. Given that You Tube has 20 million UK users, even with a relatively low cost-per-view - this should bring in much needed funds for C4. It'll be very interesting to see what concessions are made to the sponsors of existing C4 shows. Channel 4 have an excellent track record in monetising their programs from a sponsorship point of view. Will this deal be covered in existing and future C4 sponsorship deals as they are on Channel 4's online catch-up site, 4 On Demand.

Channel 4's out-going chief executive Andy Duncan said of the deal "it demonstrates our ability to strike dynamic commercial partnerships to help underpin our future as a commercially funded, not-for-profit multi-platform public service network." So yes, some much needed immediate cash.

But there are sceptics industry stating that C4 have mortagaed the longer-term value of their content for short-term rewards.

"No broadcaster in the world has done a long-form deal with them [YouTube] for a good reason," said a senior executive in the digital broadcasting industry. "They already control 65% of the UK video market. With that kind of market power, long-term they will screw you. Channel 4 has taken short-term profit and Sacrificed long-term value. It is not a smart deal.

For You Tube, well I see this as a win win situation for them. They get some exceptionally high-quality content that viewers will seek out and spend considerable time with. No doubt boosting overall revenues and not just those linked to the C4 content.

There appears to be an interesting kicker to this deal. I have no idea Whether the new C4 series 'Rude Tube' is tied to this deal, but it seems too close not to be.

Zane Lowe presents a weekly wraps up of the best You Tube action (in the tradition of You've Been Framed but for the 'yoof'). Classic You Tubes are replayed and the story behind them told.

Long-term its hard to tell what the result will be, but in the short-term it appears to be a good deal for Channel 4, You Tube and consumers.

UPDATE 19/11/09

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