YouTube Toys With A TV-Like Feature In Pursuit Of Growth, Ad Dollars

YouTube, the behemoth of online video, may have to become more like the medium it hopes to replace one day if it wants to attract an even broader audience. That’s why Google's video unit has been experimenting with a feature called What’s Next, which offers users videos in a continuous, linear fashion -- just like TV.

What’s Next is a feature that automatically plays another video after the one selected by a user finishes. The feature is being tested on 25 percent of YouTube’s desktop audience -- more than 100 million users -- and comes included by default on the new YouTube Kids app that launched this week for Android devices. The test feature comes at a time when YouTube faces mounting challenges on multiple fronts.

In the past year, Facebook has emerged as a formidable foe that threatens to eat into YouTube’s ad business, while various startups, most notably Vessel, have also popped up with hopes of skimming ad dollars from the cream of YouTube creators. And while YouTube’s intake of ad money has risen to a reported $5 billion, the costs of running the business remain high and have kept the Google unit from turning a profit. A decade in, the pressure is on to show that YouTube can turn its dominance in Web video into a money-making business.

Since its inception, YouTube has been essentially one click, one play, but switching that to automatically playing the next video would lead to a 20 percent bump in watch time, and a similar bump in ad revenue, according to Brian Shin, CEO of video ad company Visible Measures.

“Anything that they can do to get more people to watch more videos per day or per session is really key, and What's Next is probably going to drive that," he said. Shin said he would be surprised if YouTube did not introduce What’s Next in a broader fashion by the end of June. YouTube declined to comment on its plans for What's Next.

On YouTube Kids, What's Next makes it easy for children 13 and younger to keep watching videos by cutting out the complicated process of finding and playing another clip (YouTube points out that there's also a timer feature parents can turn on to limit how much time their children spend on the app). But What's Next could also help the online video company attract an older audience that is not accustomed to watching videos à la carte, as is the case on YouTube.

"They need an easy-to-understand, decision-free experience for content consumers of linear TV to move their viewing onto YouTube," said Mike Jones, CEO of Science, which starts, funds and acquires companies, and an investor in Famebit, a YouTube marketing firm.

Jones and other experts argue that to draw more advertising money, YouTube must create features that make it feel more like watching TV. This will help the service draw in users who typically only come to YouTube when they come across a video on their Facebook feed or receive a link from a friend. “In the wake of YouTube expanding their audience and really taking a bite into linear TV watching, they need a bridge,” he said.

Instituting an auto-play-type feature is no easy task. Most online users are easily annoyed by apps and websites that play videos automatically, due to the loud, interrupting audio that usually comes with it, but that sentiment has begun to change. Recently, Vine, Instagram and, most notably, Facebook have added auto-playing video features that have been well received by their users, making it much more acceptable for other services to do the same. YouTube may get some backlash when it introduces What’s Next to all users, but probably less than would have been so a few years ago.

“Facebook paved the way with that. They made people comfortable with auto-play, and now Google is taking advantage of the groundwork,” said Ariel Rosenstein, senior director of corporate marketing at SimilarWeb, an analytics firm. Right now, the average length of a mobile YouTube session in the U.S. is about nine minutes, according to SimilarWeb. Rosenstein said he expects YouTube will first integrate What’s Next into its apps in order to get mobile users to watch longer.

“YouTube is looking for ways to increase engagement, and this is a great way to do it,” Rosenstein said.

Another delicate matter is advertisers. YouTube will have to show marketers that auto-play will get users to watch for longer periods and ease any concerns they might have about viewers turning on YouTube, leaving it playing in the background and ignoring their advertisements. “Advertisers are interested in quality as much as quantity,” said Paul Verna, senior analyst at eMarketer. “The idea of force-feeding an ad to someone is not always a compelling thing.”

But if YouTube can get the quality of What’s Next right, there’ll be a pool of marketers there waiting to buy more advertisements, said Lauren Wiener, president of global sales and marketing for Tremor Video, a video advertising agency. If YouTube’s team can create algorithms that call up quality videos that will get users to stick around and stay engaged, advertisers will take notice.

“There’s very high demand for video advertising. It’s a high-growth market … so it’s very much in [YouTube’s] interest to be able to create more valuable advertising inventory,” Weiner said. “This is really a tipping point year where we, Google and everyone in the market have seen TV dollars truly flow across all screens because the consumers who are most valuable to advertisers -- the millennials, certainly kids -- are not consuming their entertainment content just on that living room screen.”