Media industry unveils YouTube challenge

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NBC Universal and News Corp have sealed plans to create an online site to distribute professionally produced movie and television content – the biggest media industry effort yet to knock YouTube aside as the top online video destination.

The site, which will launch this summer, has signed up AOL, MSN, MySpace and Yahoo to distribute the videos, which will be free to internet users and funded by advertising.

The plan appears to be another setback for Google, the internet search company, in its efforts to forge partnerships with traditional media companies after its October acquisition of YouTube for $1.65bn (£840m).

This month, Viacom, which owns MTV Networks, sued YouTube for $1bn after negotiations over questions about licensing fees and who would control advertising relationships foundered. Media companies have also accused YouTube of failing to take seriously efforts to identify and track copyrighted video put up by users on the YouTube site.

News Corp and NBC Universal, jointly owned by General Electric and Vivendi, will create a 50/50 joint venture, yet unnamed, which will be based in Los Angeles and New York.

Peter Chernin, president and chief operating officer of News Corp and Rupert Murdoch’s number two, will sit on the new company’s board with Jeff Zucker, new NBC Universal president and chief operating officer.

As well as its own top video content from TV hits such as as Heroes, 24, The Simpsons and Top Chef,and movies including Borat and Little Miss Sunshine, the site is aiming to license content from other top media groups, including Time Warner, Sony Corp, CBS and Viacom.

“This is a game-changer for internet video,” said Mr Chernin. “We’ll have access to just about the entire US internet audience at launch. And, for the first time, consumers will get what they want – professionally produced video delivered on the sites where they live.”

Together, the online traffic of AOL, part of Time Warner; Microsoft’s MSN, News Corp’s MySpace and Yahoo accounts for 96 per cent of the monthly US unique users on the internet.

In online video, however, YouTube continues to dominate, although much of its traffic is in user-generated videos, which do not lend themselves as easily to advertising. MySpace has rapidly developed its video capability in recent months and is now the second-biggest video site.

At launch, the site will be supported by advertisers including Cadbury Schweppes, Cisco, Esurance, Intel and General Motors.

It was not clear whether other media companies would support the venture.

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