YouTube pauses its film and TV expansion plans

As Netflix and Amazon.com pour ever-larger sums into TV and movie production, Google is holding spending at current levels for its YouTube Red streaming service for the next two years, people with knowledge of the matter said. That’s leading producers to question the company’s strategy.

Google often makes multiple investments in the same industry and waits to see what works. YouTube, in particular, has revamped its video strategy repeatedly as parent Alphabet tries to develop paid-subscriber businesses. Now it’s pushing into entertainment on three fronts: with YouTube Red, with a live video service called YouTube TV and with a new music streaming product.

“YouTube Originals are a driving force for YouTube Red, and we have a full slate of Originals already planned for 2018 and 2019,” Robert Kyncl, YouTube’s chief business officer, said in a statement. “While we don’t comment on speculation regarding our budgets, you’ll see us continue to invest heavily in original programming as we ramp up our overall efforts to promote YouTube Red over the next year.”

YouTube plans to spend a few hundred million dollars on TV shows and movies this year, said the people, who asked not to be identified discussing the company’s plans. While that sounds like a lot, a flat budget means the company risks falling further behind Netflix and Amazon.

YouTube is one of the three “big bets” that Google Chief Executive Officer Sundar Pichai has cited as the company looks for future growth. The video site generated an estimated $15 billion in sales last year but has yet to establish more than a foothold in paid services.

On a February 1 earnings call, Pichai highlighted new deals for a low-cost alternative to cable TV — dubbed YouTube TV — but made no mention of YouTube Red, the on-demand streaming service first introduced in October 2015. YouTube TV, which offers a bundle of live TV channels for $40 a month, has signed up an estimated couple hundred thousand subscribers since being introduced last year.

YouTube is also about to roll out a new music service, which has been receiving a lot of resources. YouTube CEO Susan Wojcicki recently referred to Red as a music service, which only added to the confusion.

“That’s the first time I’ve ever heard you characterise YouTube Red a music service,” Chris Williams, the head of children’s media company Pocket.watch, said at the Code Media conference this month.

Run by engineers, Google has struggled to carve out a large role in entertainment beyond hosting other people’s programming.

YouTube was one of the first major tech companies to fund original shows, seeding 100 channels from online creators and celebrities like Amy Poehler and Jay Z.

The results were mixed but led to the birth of several popular outlets, including SourceFed and AwesomenessTV. YouTube funded a second round of channels before ending the programme in 2013.