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TO: Proximity Social Networking Team FROM: Matthew Lam DATE: February 27, 2010 SUBJECT: YouTube Strategy Analysis

Here is my YouTube strategy analysis. YouTube has become very popular in a matter of a few years and now dominates the online video market. Whether Gen Y users will continue to adopt YouTube as their primary source for online video depends on whether YouTube can continue to set the standard in online video market.


 * Profile**

YouTube, a website that hosts a wealth of videos uploaded by registered users, was founded by Steven Chen, Chad Hurley, Jawed Karim in 2005. The three founders of YouTube saw that there was no easy way to share videos, so they created YouTube (Cloud 2006). Like many technology start-ups, YouTube began as an angel-funded enterprise from a makeshift garage (Wikipedia 2010). Their former goal was to create a website that was a video version of HOTorNOT.com. However, that idea only lasted a couple months as people were posting whatever videos they wanted (Cloud 2006). Within a year, YouTube's popularity skyrocketed as more people were viewing and uploading videos on their site.

On October 9, 2006, it was announced that the company would be purchased by Google for $1.6 billion in stock. Youtube's main source of revenue is from advertising, and prior to its buyout from Google it reported earnings of 15 million dollars a month. YouTube currently generates well over one billion views per day (Wikipedia 2010).


 * Competitive Landscape**

The online video competitive landscape is dominated by two forces. The primary driving force is video content and the ability to generate online traffic. The second driving force is the ease of access and convenience. People want to visit the website that is most user friendly.

YouTube is threatened by Hulu's model of online TV and movies. While YouTube currently leads in online video viewing, Hulu is doing much better at monetizing it's content and legally providing many of the shows that people want to watch (Crum 2008).


 * YouTube's Strategy**

YouTube has always catered to the interests of the amateur online video community and they are against pre-roll ads which are hated by many people. However, due to fierce competition that it's facing from Hulu, YouTube is starting to incorporate TV-style ads into their videos to help cover the costs of bandwidth and studio fees (Sinclair 2010). YouTube is trying to offer movies, TV shows and content from studios such as Crackle/Sony Pictures, CBS, MGM, Lionsgate, Starz, the BBC, Anime Network, Cinetic Rights Management, Current TV, Discovery, Documentary Channel, First Look Studios, IndieFlix, National Geographic and more (Trend Hunter Magazine 2009).


 * Gen-Y Implications**

Although YouTube currently dominates the online video market, there are many up and coming challenges that pose a threat to YouTube's continual success. To keep up with the current market, YouTube may have to give up it's former business model and incorporate TV-style ads which may deter people from visiting their site.

I believe, however, that YouTube's biggest challenge will stem from many new online video companies and their quest to provide more interesting content. As more online video companies arise, YouTube will struggle to keep their top stop in the industry.


 * References**

Trend Hunter Magazine. (2009.) //YouTube & Hulu Duke It Out Over Ad Dollars//. Retrieved February 28, 2010, from http://www.trendhunter.com/trends/youtube-vs-hulu-online-movies- video-competition-for-advertising-dollars

Sinclair, Laura. (2010.) //Google Pushes Pre-roll Ads on YouTube.// Retrieved February 29, 2010, from http://www.theaustralian.com.au/business/media/google-pushes-ads-on-youtube/story-e6frg996-1225832757398?from=public_rss

Crum, Chris. (2008.) //Will Hulu Dethrone YouTube as Top Online Video Dog?// Retrieved February 29, 2010, from http://www.webpronews.com/topnews/2008/08/20/will-hulu-dethrone-youtube-as-top-online-video-dog

Wikipedia. (2010.) //History Of YouTube.// Retrieved February 29, 2010, from http://en.wikipedia.org/wiki/History_of_YouTube

Cloud, John. (2006.) //The Gurus of YouTube.// Retrieved February 29, 2010, from http://www.time.com/time/magazine/article/0,9171,1570721-2,00.html