TBI Weekly: Why producers really need to get over their YouTube fears

7 vs Wild (Source: Quintus Studios)

ITV Studios and Welsh broadcaster S4C joined the billions of younger viewers flocking to YouTube this week, yet a sizeable minority within the industry continue to see it as a lesser form of TV. Quintus Studios chief Gerrit Kemming argues now is the time to embrace a digital-first approach.

Over the last year, media commentator Evan Shapiro has been warning the TV business about the challenge represented by YouTube.

Possibly, it’s already too late for legacy broadcasters to do anything – but content creators shouldn’t hold any fears

At MIPCOM, he pointed out that the Google-owned content sharing platform dwarfs the FAST business – currently the focus of so much frenzied attention. More recently, he used a Royal Television Society debate to call YouTube “an existential threat” to the legacy TV business.

Key to Shapiro’s thesis is that YouTube’s share of big screen viewing is growing rapidly thanks to the increased penetration of connected TV sets (the same phenomenon driving FAST).

Not only does YouTube look set to overtake Netflix’s share of eyeballs as a result of its presence on CTV, but it has become the default viewing option for many kids and teens around the world.

Shapiro concludes that “there’s a real risk that broadcasters are going to lose this generation of consumers forever.”

Gerrit Kemming (Source: Quintus Studios)

Possibly, it’s already too late for legacy broadcasters to do anything about this paradigm shift in audience consumption patterns.

But for content creators, the emergence of YouTube as a dominant player in the TV business shouldn’t hold any fears. Endlessly creative and adaptable, producers have all the necessary skills to establish themselves as key players in this dynamic content-centric ecosystem.

That’s the theory, anyway. In practice, many TV producers are yet to take YouTube seriously.

Despite the fact that audiences watch a staggering one billion hours of content on the platform every day, most production houses still use the platform primarily as a destination for clips, bloopers and behind the scenes content.

Very few have embraced YouTube as an opportunity to originate new content. In part, this reluctance is due to the outdated view that YouTube’s digital-first productions can’t match the quality standard of their counterparts on broadcast.

How to produce content that works for YouTube

Clearly, the economics of YouTube are currently such that you won’t find the money to make The Crown or Blue Planet – and that’s unlikely to change unless the platform gets back into the premium subscription business that spawned series like Cobra Kai.

But in the realm of kids, factual, entertainment and animation, the gap has narrowed dramatically – a fact that should come as no surprise. As YouTube consumption has matured beyond cats being scared of cucumbers, digital viewers are demanding broadcast quality programming – and there are plenty of studios delivering it.

CoComelon (Source: Moonbug Entertainment)

The huge global success of Moonbug’s preschool hit CoComelon is one high profile illustration. Quintus Originals are another. Series like Red Zones and Beyond Borders are digital-first series that launched on our Free Documentary YouTube channel and have since been licensed to traditional TV broadcasters.

And we’re not alone in narrowing the gap. Studios like LADbible, Future, Little Dot, Jungle and Vice have all created digital-first and TV-second content that can easily compete with traditional TV-content in regards to storytelling and production value.

Vice may ultimately have overstretched itself – but not before it gave us powerful series like On A Knife Edge: London’s Knife Crime Emergency and Ballet And Bullets. Future Media, meanwhile, teamed up with Marie Claire to create On The Record.

Many of the people in charge at those innovator companies have a TV background who took their demand for sophisticated content with them to the digital world and now they apply it to the (digital) behaviour of their target group.

Beyond Borders

At Quintus for example, the team which is responsible for digital-first Quintus Originals joined from top level TV companies such as Discovery, BBC and Off the Fence, making sure that the audience’s desire for compelling and high quality content is met wherever it is watched.

Still not convinced? Then what about the fact that the BBC, Channel 4 and MTV have also embraced the digital first ecosystem?

Only last month, Channel 4 announced plans for a new digital-first commissioning strategy that will emphasise drama, documentaries, comedy and reality, targeting youth audiences on platforms including YouTube. Already C4 has enjoyed success with shows like Untold and Secret Sauce.

Why digital content business models can add up

Of course, some producers are acutely aware that digital-first content can be as good as TV. But their reluctance to engage is more about the business model. For companies used to securing their budgets via commissions and pre-sales, it’s true that financing a show via YouTube can look more daunting.

In the absence of a commissioning budget the risk is a lot higher, not only as the investment into the production will only be made back if the produced content performs accordingly on the market, but also the business metrics change. The business is not driven by the reliable service of producing the content any more, but by the profit that the produced show actually makes.

For producers, the message is that there is a viable digital first opportunity if they are willing to flip the script on funding models

Suddenly, maximising the production budget isn’t the ultimate goal, but minimising it – while keeping the same production quality. This positioning requires a complete shift of a traditional producer´s mind set.

Fortunately, the disruption in the TV market over the past years has led to a higher diversity in potential outlets for good content – and many of them can be exploited at the same time these days.

This also requires a different form of distribution in a more fragmented, more non-exclusive way. YouTube, linear, streamer, social and FAST – as long-form and short-form (taken from the long-form) – all need to be considered at the same time.

At Quintus, we run a successful hybrid model which combines digital-first commissioning with distribution – linear and digital. Using data from our millions of YouTube subscribers, we identify topics that we know will resonate with audiences.

We then cooperate with producers to create relevant shows. Once these have built sufficient traction, we can go to broadcasters armed with evidence that they work. What we’ve learned is that there is a strong correlation between high ratings on our digital first channels and on TV channels – a powerful point during pitches.

Why diversifying digital revenue sources is key

The new reality is that there is not this one classical cascade of content funding any more. Sometimes a production is highly profitable from YouTube revenues alone. Sometimes it needs to be heavily exploited on YouTube, social short-form and FAST to refinance the investment, drive viewing numbers and convince linear broadcasters to buy into the ready-made to make a profit.

Sometimes an idea developed for digital is then co-produced with linear and all additional revenues from linear and digital sales and exploitation are pure profit for the IP and back-end owner(s). And sometimes it is a mixture of all of the above.

Cobra Kai

The new reality also is that the money will not come in one batch and that’s it. It will come, over time and from different sources. But what hasn’t changed is that compelling, well-made content is a financially highly valuable product.

Another important point for producers is to adapt to the market rather than impose.

There’s no question, for example, that a premium tier of content creators like Mr Beast and the Sidemen that have cracked the code – working out how to generate multiple sources of revenue from YouTube. The lesson is to work with them to build powerful content.

A good example is 7 vs. Wild, a reality format that first came to prominence via YouTube in Germany. Developed by German YouTube producers Fritz Meinecke, Johannes Hovekamp and Max Kovacs, the show sends seven content creators and influencers into the wilderness with just seven basic survival items. Hugely popular in Germany, it shows how creators with strong communities can drive commercially-viable content – and that is something producers urgently need to tap into.

We at Quintus are fortunate that we come from a distribution and co-production background; because the deal-making skills we have learned are well-suited to the world of digital first content.

For producers, the message is that there is a viable digital first opportunity if they are willing to flip the script on funding models. That’s not necessarily a message producers want to hear, but it could be the key to survival.