Friday, December 2, 2011, 10:17 AM ET|Posted by Will RichmondYesterday YouTube launched its most significant redesign yet, with a strong emphasis on channelizing the site, deeply personalizing the experience, and integrating social interaction throughout. As the introductory blog post says, the redesign is all about helping users "discover a broader range of entertainment on YouTube." And though YouTube would never admit it, I think the redesign marks the start of a long-term siege on the traditional pay-TV model. YouTube is squarely focused on would-be cord-cutters and especially the younger generation of "cord-nevers" for whom the web has already become a bona fide alternative to expensive pay-TV services.
As I originally explained earlier this year (here and here), YouTube has adopted the role of "strategic catalyst" for the online video industry, essentially seeking to provide the same value as cable operators did for early cable networks - distribution, promotion and financing - in order to jumpstart a parallel universe of web-only programming. YouTube is bringing to bear its massive scale, unlimited financial resources of parent company Google, deep insights about its users' behaviors, integration with numerous connected devices and increasingly sophisticated monetization practices.
With the redesign, YouTube is taking another important step in helping its users see YouTube as something far different than the scruffy user-generated site it originally was. While YouTube will always have a role as world's primary video sharing site, going forward YouTube wants to be seen as a place for longer-form, higher-quality content, geared for hours, not minutes, of entertainment. Sure, the outrageous "Jackass" style clips will always have a place on YouTube, but as the redesign's emphasis on channel selection and personalization underscore, YouTube wants its users to believe they could actually settle in for an entire evening of personalized programming available through their own tailored UI. Given the proliferation of connected devices and YouTube's omnipresence on them, viewing on the living room TV is increasingly straightforward.
The ultimate goal here isn't just audience though, it's the brand advertising that flows along with it. This has been YouTube's traditional Achilles heel - billions of video views, with only a minority of them monetizable as brands shun the gross and the goofy. In this respect, YouTube's recent move to invest $100 million in independently-created, brand-safe programming is just one part of a larger monetization strategy. In fact, YouTube's whole conception of advertising's role in video is disruptive; its TrueView format seeks to establish performance, not impressions, as the key driver for ad spending. If YouTube can succeed with this approach, and content providers can create quality programming on a budget, then YouTube will be pioneering a new financing model that doesn't require pay-TV's high subscriber fees to fund Hollywood-style productions.
To be sure, that's a lot of moving pieces and none of this will happen overnight. This is a very long-term game that YouTube is pursuing. But with its new redesign, YouTube is clearly beginning to establish itself as an alternate entertainment environment that is personalized, ad-based and mostly free to users. Back in cable's early days of re-runs and ping pong tournaments, few gave it much chance against the big 3 broadcasters, yet look how things have turned out. The pay-TV industry would be wise not to similarly underestimate YouTube as it looks to poach existing and prospective subscribers. There are huge challenges ahead, but YouTube has a lot of momentum behind it.