YouTube apparently decided to acknowledge what must be a bitter pill to swallow: It can’t sell enough YouTube Premium subscriptions to cover the costs of its original programming ambitions, which is reportedly in the hundreds of millions of dollars. The new plan, according to The Hollywood Reporter, is that “all future originals [will be] free to its 2 billion users, regardless of whether they pay $12 each month for subscription service YouTube Premium.”
By “free,” YouTube means that you will have to watch ads, just like all of its other free content. The move, which will begin in 2020, is apparently being accompanied by an overall scaling back of its original programming budget. With a lower budget, we can expect to see a shift in the tone and type of content. “As we look to 2019, we will continue to invest in scripted programming and shift to make our YouTube Originals ad-supported to meet the growing demand of a more global fanbase,” a YouTube rep told Variety. “This next phase of our originals strategy will expand the audience of our YouTube Original creators, and provide advertisers with incredible content that reaches the YouTube generation.”
It doesn’t take a lot of tea-leaves reading to guess that some of YouTube’s splashier efforts, including Cobra Kai, and Step Up: High Water, simply haven’t been able to attract enough viewers willing to shell out the monthly fee for Premium. Rather than see this content wither behind a paywall, YouTube has made the logical choice to maximize its return on investment by grabbing ad revenue, too. The fact that this content will now enjoy a much larger audience is a bonus: The more people who experience what YouTube can produce, the likelier it is that the company can return to a subscription-only model in the future. However, the odds are better that YouTube will simply acknowledge that it has created the world’s biggest ad-driven video platform and that trying to beat Netflix and Amazon Video at their own game just doesn’t make financial sense.
It’s difficult to know at this point if the company will keep its Premium subscription tier in the future. It still comes with some perks, like early access to original content, ad-free streaming, a live TV offering, plus its music service. As good as these features are, they might simply not be enough to keep the Premium product alive — Business Insider is already speculating that, as of this announcement, the service should be considered on life support.