Neoco

There is a tabletop game called Risk! I cannot quite remember all the territories but I think the most difficult to win with was the Russians. Fighting a war on so many fronts was a costly business and often the death of many a player. It’s seems clear that Google never played Risk! as their purchase of YouTube was much like buying the Russian territory in the game – a relentless battle on many fronts that drains resources. But if there was ever an organisation with a war chest big enough to to take the ‘risk’ then it would have to be Google. With some of the brightest minds pouring over the YouTube business looking for revenue models, they have done well to at least stem some of the flow if not plug it entirely. With that we’ve also seen an ascent (?) taking YouTube from ‘Poacher to Gamekeeper‘ and this continues with the (very discreet) launch of their new video rental service.

This is a HUGE piece of news due to the potential impact of this business model succeeding.

First, there is the competitive marketplace that already exists in this sector. Netflix is the major player here but there are many more like LoveFilm (UK) or the new Hulu service. The issue for those guys is the sheer size of YouTube’s audience which should steam roll them and mean it starts with a significant advantage.

Then there is the already existing rental service of iTunes. This is a big player too but Apple benefits from a large community of advocates (sometimes against reason) who will remain loyal. But this is not the biggest fear for Apple or potential ‘win’ for Google. That comes when we move to future technology. Let’s consider the YouTube rental service does well and picks up momentum. It would be very logical to build a YouTube Android phone…

Android is already hotly tipped to take over the iPhone as the number one smartphone. There is no doubt it can win on units but what about the service. I’ve long said that Apple stands head and shoulders over it’s rivals because of the iTunes platform. It is more reliable, intuitive and ‘ingrained’ with the audience than any other store (including Ovi). But a YouTube Android phone changes that game. Imagine YouTube start serving all music (with optional videos) too. Now with an API on my phone (or dedicated handset) I could stream (on tether to my phone) a massive library of my music and video content. This becomes a major selling point for Google (and their partners like HTC) whilst really eating in to the iTunes dependency of some user. Consider, that I could then also easily share my playlists with friends or arrange to watch a movie at the same time (in different locations) and chat or skype too. There are a lot of possibilities here and it’s very exciting to see where things go.

Finally, there is the irony element. Forget the potential here, let’s look at the service being a success and YouTube creating original content for their audience. Pretty much every online video service has done this at one point or another. You then have to consider the irony of YouTube creating original content which will be ripped and pirated by the audience and uploaded for free around the web – maybe even on another future YouTube. And is that the point when we recognise YouTube has finally come of age?

NB. I couldn’t put all this in and not mention Blockbuster Video. What has happened to them and where will this leave them?

Tags  15 seconds of fame Android Apple Blockbuster community future game Google how htc iPhone iPod irony itunes lovefilm netflix new piracy playlists risk service share strategy video video rental YouTube