Can YouTube Play with the Big Boys of Video?

Just a couple weeks ago, YouTube (NASDAQ:GOOG) announced they would be offering streaming movies on their site in efforts to compete with television viewership.  Since the announcement, YouTube has posted thousands of movies on their site available for 24-hour rental, with new releases priced at $3.99 and older movies priced at $2.99.  Unlike subscription-based services that allow unlimited viewing at a monthly fee, such as Netflix (NASDAQ:NFLX), YouTube has set itself up in competition with services like iTunes (NASDAQ:AAPL), Amazon On Demand (NASDAQ:AMZN), and Facebook, which last month announced plans to include a similar service on their site.

In a May 9th blog post, YouTube’s Salar Kamangar wrote:

“You’re finding more and more of the content you love on YouTube, which is now available on 350 million devices. We know this because you’re watching videos to the tune of 2 billion views a day. But you’re spending just 15 minutes a day on YouTube, and spending five hours a day watching TV. As the lines between online and offline continue to blur, we think that’s going to change.”

With that, YouTube (NASDAQ:GOOG) threw its hat in the ring.  But is it really a contender?  Here are the facts:  YouTube already has the users, giving it a leg up, but it’s not offering anything new or different.  It’s essentially the same as any online streaming pay-per-view service already out there.  And with Netflix currently beating out every other subscription-based service, it looks like YouTube will be helping itself to a very small slice of the pie.  But don’t tell them that.  YouTube considers Netflix (NASDAQ:NFLX) and Hulu (NYSE:GE) to be two of its top-competitors, though they have yet to set forth any plans for providing TV programming, which both of their would-be competitors do, with Hulu posting shows the very morning after they air live on TV.  And YouTube doesn’t exactly beat their pricing: At as low as $7.99 a month, Netflix is more cost-effective for most viewers, and Hulu has the advantage of being entirely free with limited advertising, while their new subscription service, Hulu Plus, adds even more streaming shows and movies for $7.99 a month.

But none of that has stopped YouTube from stealing away employees from what it sees as its top competitor: Netflix.  Last summer it was Robert Kyncl, and then last month, Netflix (NASDAQ:NFLX) engineering VP Christian Kaiser, and today, Thomas Purnell-Fisher.  And there’s no way those employees were cheap, considering Netflix stock is up 41.49% so far this year, and 149.92% from this time last year, having gained 9 million subscribers in that time.  Maybe YouTube (NASDAQ:GOOG) has more to come–I would certainly expect more from the pioneers of online video.  But so far, their efforts seem meagre and unimpressive.

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