Why haven't TV production companies jumped into YouTube?
This is a permissionless revolution, so why aren't more companies leaping at the opportunity?
Hello! A few weeks ago I wrote a piece pondering why TV production freelancers haven’t been getting into YouTube. I said I’d do a separate post with thoughts on why many TV production companies haven’t taken the plunge either, especially considering the size of the opportunity, the natural fit with TV production and the state of the TV market. So here it is, in the week marking the 20th anniversary of the first video being uploaded to YouTube.
Before starting, it is worth saying that many if not all of the beliefs about YouTube I covered in my post about freelancers also apply to TV production companies - after all, the vast majority of TV companies are founded and run by TV producers, so it would be odd if these two groups had vastly different views. If you missed it, here it is:
However, there are additional factors that only affect companies, and this is what I’ve written about this week.
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As longer term subscribers are familiar, I’ve written about YouTube and TV many times. For example:
I’ve also done a good number of presentations with TV production companies who want to understand the nuts and bolts of how YouTube works, as well as the opportunities and risks (do get in touch if you’re interested).
And of course there are events (including Create London above), plus lots of other articles by industry commentators and experts as well as the trade publications. For example this Broadcast piece from a few weeks ago “YouTube is TV’s next frontier”, or here is Bloomberg’s Lucas Shaw talking to the BBC’s Katty Kay ‘Is YouTube making Hollywood irrelevant?’ from yesterday.
The general gist is as follows:
YouTube is the world’s audio visual storytelling platform where you can build and monetise an audience
It is eating up a big chunk of viewing on the TV (although in the UK not as large a share as Nielsen’s American The Gauge’s numbers suggest, but the trend is clear). So while before TV, film and games consoles used to have the living room all to their own are now competing with YouTube for audience attention.
If predictions are correct and network TV budgets are going to flatline or have anaemic growth and it is only SVOD commissioning where we see an uptick (and only in a fairly narrow set of genres), then production companies may be forced to look to other places to grow their businesses
These new markets boil down to:
New sources of finance
Branded content
Direct to consumer
For direct to consumer, YouTube is the natural place for audio visual storytelling production companies, and is also a great way to get into branded content
The more convergence happens, the more TV production companies will be expected to be ‘content’ production companies and therefore having direct to consumer channels will become part of the expected offering for marketing, audience insights and additional revenues
Consequently, having a decent YouTube presence (as well as other direct to consumer channels) may increasingly be considered the new normal.
With all that in mind, the argument follows that the faster TV production companies jump on board the YouTube and direct to consumer train, the quicker they start to build followers and establish an internal understanding of how this all works.
Why has there not been a stampede to YouTube?
Despite all of this noise and chatter about market shifts, outside of the super indies we have yet to see TV production companies getting into YouTube in a meaningful way. And I think there are several reasons for this, including culture, structure and economics.
Economics
Firstly on economics: TV is a low profit margin game. So yes, some companies hit on the creation of formats which are money-making machines, but in general production companies are working to a 10% production fee and then whatever internal recharges can be made to the budget with occasionally some - but not necessarily huge - income from future secondary sales.
If anything goes wrong with a production then these profit margins are eaten into, and that is before we get to the downward push on budgets combined with the increasing desire for ambitious editorial putting yet more pressure on the ability to make profits.
There is also a whole load of companies chasing fewer commissions and this increased competition is further driving down profit margins as well as making TV production companies even more hyper-focused on buyers, perhaps to the exclusion of all else. The networks themselves are taking fewer risks and therefore are asking for stories with a guaranteed outcome, but often aren’t prepared to put the necessary money into paid development which might deliver the outcomes they seek. And so the development onus is increasingly on the production company, therefore adding yet more pressure on overhead costs.
As a result, there isn’t a lot of cash sloshing around to fund was can often be viewed as an exploratory innovation strategy to expand into a new market. And for TV production companies, getting into YouTube can be considered risky as the financial exposure sits with the producer rather than the commissioner.
Production companies are in a bind, chasing thinner slices of a smaller pie, and are either forced to double-down on that or make a big swing by getting in direct to consumer with no guarantee of success. This isn’t dissimilar to the challenges faced by the cable networks in the US when facing the rise of streaming which I wrote about last week: their bind was whether to solely chase declining but predictable and familiar revenues of cable subscribers, affiliate fees and advertisers versus timing the necessary leap into the unknown of streaming which may upset the existing model. And with no guarantee of success in the new market.
Plus of course the revenue model for YouTube can seem unworkable to a TV production company used to budgets north of £200k per episode; after all, for a monetised channel, the advertising revenues net of YouTube’s share is roughly 1m views = £3k to £5k, and there is no guarantee you’ll even get that.
Not to suggest that everything in the digital garden is rosy - budgets are much smaller especially outside of brand and marketing work and therefore the content is often less ambitious in scale. Branded content can be hugely demanding and hard to win, with smaller budgets than TV. There is no guarantee of revenues, indeed these can often be elusive; and you are much more a slave to the algorithms and the changing priorities of big tech. And knowing which horses to back is a tricky game - you only need to look at previous hot things that turned out to be fads.
Structure of the market
Another key factor that has acted as a barrier to production companies getting into YouTube is the structure of the market. TV production is steeply and perhaps even somewhat rigidly hierarchical. So you start out at the bottom - a runner, say - then work your way up whichever tree you are wanting to climb. For those of the editorial branch, it can go assistant producer, producer director or edit producer, to series producer and executive producer. Or alternatively production secretary to production manager, line producer up to Head of Production. So TV production people spend their entire careers becoming really really good at one thing which is making TV shows. And this is how the large freelance market has been able to flourish, because people are fairly clear on what each role involves, and therefore people know what job they are applying for and whether they’ve got the skills and experience to do it well. In turn, those crewing up can also fairly easily and quickly evaluate someone’s suitability for a particular role.
In contrast, the digital market is messy and much flatter, with few clear edges and roles which are often vaguely defined (although worth noting that in digital agencies working for brands there are much clearer roles and structures). In the parts of the digital market that are closest to TV and broadcasting, it is common to find people in non-technical roles who have worked across everything from social to websites, games to podcasts, apps to streaming services, video to interactives, and in a broad range of functions from production, editorial, community management, client management, social and product management.
This breadth means people can often have a wide (but not necessarily deep) range of experience. And reflects much academic business theory which has being trying understand how organisational structures can encourage innovation - so for example it is believed that flatter structures can encourage collaboration and agility (while they also can lead to dysfunction).
Culture
Both of these elements - economics and structure - feed into culture. A big part of working in digital is being curious and enthusiastic about the new - trying out new things, seeing what works, jettisoning what doesn’t, ignoring barriers and indeed relishing crossing over them. It is about new tech, new platforms, new revenue opportunities, new partnerships, new audience behaviours. Many people working in this market have an entrepreneurial spirit and enjoy smashing through boundaries and upturning the established ways of doing things.
And while TV producers also thrive on the new, it is usually more narrowly focussed around TV show ideas, editorial and talent. Everyone’s energies are focussed on getting a gatekeeper - mainly a commissioner but perhaps a brand - to green light a project, and then delivering to their expectations. In addition, the relationships between production and commissioning can be particularly close where individuals go from companies to broadcasters or networks and back again. These tight knit relationships, founded on confidence in someone’s ability to deliver, have been essential to grow and sustain the peculiar economics of the independent production sector. If the connections were more distant and formal between buyers and sellers they would have slowed the commissioning and production process and therefore increase the costs for projects. However, this dynamic has also created a dependency cycle which can make production companies even less likely to take risks and look beyond existing buyers to new markets.
The fluidity within the digital market, which involves seeing opportunities and not barriers, is a result of the upending nature of technological change and the dilution of the power and importance of gatekeepers. Not to say people in the digital market are bulletproof when it comes to constant change, but the test and learn cycle is an intrinsic part of people’s day jobs; that is try something out, if it works great if it doesn’t fine, you’ve learned something so rework and try again which is a core part of the process on the road to a success.
This can also create different tolerances for quality. For TV, the show that is to be delivered should be as good as it could be. Of course everyone thinks ‘if only we have one more week in the edit’, but in reality, a TV show is a completely finished product because so much money is involved and audience and advertiser expectations of quality is very high.
The growth of data and algorithms within commissioning has resulted in a both the raising of a bar as well as a narrowing of the types of shows that are being greenlit. As has been observed many times before about factual commissioning, streamers and increasingly broadcasters are often seeking true crime, sports adjacent, celebrity driven titles, fact ent shows and live. So while there is a growth in SVOD commissioning, this relative narrowness means very few companies can meet their requirements, and then even fewer of these companies end up getting a project away. On top of that, commissioners themselves can be nervous about their jobs, and so are incredibly focussed on making their shows hits. The rigorous editorial analysis of shows as they are in production means it is much more common for multiple viewings, longer edit times, as well as sometimes a lack of flexibility or responsiveness.
Conversely, working online, the concept of iteration and the test and learn methodology means incomplete and unfinished projects are often put out to audiences, to see if they get any traction. There is even a name that captures this approach, which is MVP - minimum viable product - defined by Eric Ries who coined the concept as “The version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.” TV doesn’t broadcast MVPs, but creators are often putting MVPs out there to get audience feedback.
Put together, you can see the gatekeeping by broadcasters, networks and streamers getting tighter and tighter with a rising bar that could mean there just isn’t the volume of commissions needed to keep the number of companies out there afloat. Simultaneously, if you just turn your head and look at YouTube, these thresholds and gatekeepers simply don’t exist - it is a permissionless environment, with no one dictating what you can or can’t do.
Together, this prompts the question: at what point does this situation become unsustainable for production companies? Do producers see their options as being just two - win commissions or close the doors? How many production companies understand that they have a third option which is direct to consumer? And if they want to jump into the latter, how they are planning on timing this activity? Are they right now quietly opening up direct to consumer activities as a hedge for their future? Or will we see the dam break and a flood of companies leaping into this space in a frenzy? For those companies holding off getting into YouTube to 2026 or 2027, will they have the required capacity at that point - or will the delay mean they’ve run out of road? Will TV commissioning stabilise over the next 18 months, and companies stop worrying about the overall YouTube trend for another couple of years?
Opening up a direct to consumer strand
To get into YouTube involves becoming a B2C (business to consumer) company, which could look like a foreign land as it involves developing in-house skills of marketing, distribution, schedule and community management, none of which are usually found within TV production companies (personally, I don’t think this skills gap is anywhere near a major issue, but if this is how a company feels, then that is what matters). It is worth mentioning that direct to consumer doesn’t mean just YouTube - it can be social, podcasts, newsletters, affiliate sales and so on, all targeting a niche market that you’ve identified. Revenues are stacked up via advertising, brand partnerships, product sales, subscriptions and so on, all depending on what mix is appealing for your audience and potential partners.
The mindset for YouTube
I’ll do a separate post at some point on which parts of TV to apply to YouTube (and which to leave behind) - for example, reworking your schedule to cut out the number of viewings, however retaining health and safety considerations. However as mentioned previously, the biggest mistake TV people make is by applying TV-level budgets, quality standards and ideas of 'completeness’ to YouTube content.
Embrace iteration and test and learn
I wrote about this at length previously in my post for freelancers, but to my mind this is the biggest point of failure for TV production companies trying to do YouTube. The iterative approach of publishing content, seeing what works and learning from the results to loop back round into another cycle is not a bug but a feature of succeeding on YouTube. How many TV production companies got burned over the past 20 years where they tried and ‘failed’ at YouTube, and it isn’t because the content wasn’t good, it was because it didn’t quite work, which would have been discovered via a test and learn iterative cycle? So the first step is to consciously put to one side is the idea of having a ‘ta-da’ broadcast moment, and instead embrace the idea of a test and learn cycle over a number of months if not a year or two.
Go deep on market and audience research
Using your development skills, it is important to do thorough audience and market research before diving in. This is several steps before developing the content ideas, instead it involves doing a thorough exploration of your company’s specialisms and skills, and then have a detailed look at what is out there to identify a gap in the market as well as an audience that might be interested in what you have to offer. YouTube and the creator economy is as varied and infinitesimal as the world itself, so knowing what is out there, what your competitors might be, and identifying your target audience is essential. There is a methodology to this process, and the types of questions to ask include:
What is your subject specialism in the shows you make? How many do you have? Is there any crossover between the type of shows you make? Or do you have a couple of clearly defined types?
Do a bunch of people watch your shows that are definable as a group? How big is that group? What countries are they in? What do you know about them? Where could you find out more information about them?
How granularly can you define a target audience? So not DIY-enthusiasts but “people renovating Edwardian houses”; not “middle aged men” but “middle aged men who work with their hands and enjoy building physical things in their spare time” and so on.
What is out there for these types of people? Are there tonnes of channels? How busy are these channels? Are they any good? What do people say about these channels? Could you imagine doing them better if you had to fund it yourself?
What are the performance metrics like for these channels (try viewstats.com for channel analytics)? Do you see any patterns over time?
What is the content like on these channels? Which videos perform better - is there any insight into why that might be the case?
If not just a niche tribe or set of interests, then what about a format that would lend itself to a YouTube audience? What format channels can you identify and what works/what doesn’t for these channels? Is there a hook that you could come up with that could sustain multiple videos on a channel?
What brands are sponsoring channels? If there aren’t any that you can see, what types of companies are out there that might be interested in these people? What countries are they in? What do their own marketing activities look like? Do you know anyone who might have a route into the marketing teams of these companies (or their agencies)?
Is there a gap in the market where no one is making the type of content you make for the type of people who watch your shows?
Define your unique channel proposition
Before you get to drawing up your content ideas (and when you get to that point, see if you can come up with 100 video ideas to see if your channel concept has legs), then first identify what is unique about your proposed channel, who your particular target audience is, and why your channel will be distinctive in appealing to these people. To help in this endeavour, a reminder to watch this Colin & Samir masterclass which helps you talk through this process (and also get in touch if you’ve like help with this).
Identify what level of resourcing and skills you have at your disposal
Then start thinking about some of the practicalities at play here:
Personnel - depending on the type of channel niche you’ve identified, you need a mix of the following skills:
Production - shooting, editing, script writing
Acquisition - you might want to supplement your channel with content that matches your niche
Channel management - graphics, thumbnails (see below), titling, publishing, answering audiences.
Kit - depending on what you want to do, then many creators are shooting on iPhones, and editing on their own laptop using Capcut or something similar. However, knowing that part of your edge is producing for broadcast TV (and you want your content to look great on connected TVs) then develop a stripped back kit including lights and sound that can be used by a single individual.
Footage - a key part of some YouTubers cost control is using stock footage supplemented by some original content. Many creators do seem to take a fairly loose definition of fair use as previously written about, so understanding your exposure and what you are comfortable with is important.
Thumbnail creation - there are a whole host of options here, but the main thing to be aware of is that what might knock it out the park on TV might sink like a stone on YouTube. I’d suggested signing up to something like Spotter Studio to develop ideas and test thumbnails and titles.
For a good sized company, perhaps this is a channel manager, a shoot/edit and perhaps a part-time acquisitions person if you want to use archive shows. For a smaller company, this could be just one person who does all of it. So this could be an individual plus some kit, a small budget for some stock footage, and perhaps some graphics time for thumbnail creation for say 12 months.
Work out what good looks like
Naturally this will then lead to how are we going to fund this and what does good look like. And this is where it gets tricky to answer in a post as a) it depends on your answers to the above questions b) what type of content you want to produce and how frequently and c) what skills you already have in house.
Via the iteration and test and learn process and publishing a single video a week, you could end up with by the end of say 12 months making £110k in advertising income based on a scale of very few views for the first four months, then between 100k - 500k for rest of the year, and eight videos over the year doing more than 1m views. And if that feels too punchy, and we assume no video does more than 500k, then perhaps the revenue by the end of 12 months could be around £50k. So might not cover the investment, but has gone some way to show a future for this activity. Of course, it may be that none of your videos do more than 25k views, then still by the end of 12 months you’ll perhaps have generated around £13k in revenue, gained some subscribers and learned a whole lot about how the platform works.
Leverage existing relationships
If you are part of a group, then most have their own MCN or multi-channel network (so Little Dot Studios for All3, BBC Studios, ITV’s Zoo 55, and Fremantle has 1,500+ channels). So ensuring your new channel sits within their MCN will give you a leg up in terms of how YouTube views you and also benefiting from their advertising and traffic footprint. Even if you are not part of a group, then exploring finding an MCN umbrella you can sit within is important.
Incentivisation and profit sharing
Some of the most interesting and successful direct to consumer content businesses out there are those where all the parties feel invested in the success of the venture. So taking the well known example of The Rest Is History, it is well documented that from day one no one got paid for their time, and instead all revenues have been split three ways between the production company and the two presenters. While obviously this has worked out so well for them all as it is a colossal hit, the psychological effect of this structure in the early days must have played a big part in its success. If hosts Dominic and Tom were paid (even with a profit share included in the deal) it would have encouraged them to clock watch - how many hours research have I done, how many hours to record this episode, is this a good return on my time when I could be doing other stuff that will pay me for my time?
So while you may not be comfortable asking someone to work for free to share the spoils (especially when the spoils may be relatively small as outlined above), creating incentives can help give an extra chance of a channel succeeding. Much of this is about having shared ambitions and a mutual confidence in the capabilities of those involved. Again, this is fairly familiar territory for TV production companies who often are asked to share revenues or production fees by third parties who have brought ideas to them.
Not getting into YouTube is not a neutral decision
For some companies, there are obvious reasons they want to stay as B2B2C businesses - business to business to consumer (as in, getting their projects commissioned or funded, and where the distribution and marketing to audiences is handled by broadcasters, streamers and distributors).
It maybe that they make high end TV or film, either scripted or unscripted, and to have a strand within their business that low cost and high volume can jar with their strategy or brand values.
Or alternatively things are just so incredibly tight, that the idea of putting some cash into YouTube is just far too risky at this point, especially considering that it often might involve trying to hire someone from the YouTube/digital sphere where you might not know what to look out for and there aren’t such clear mechanisms to evaluate what is a good candidate fit as there is in TV. In other words, you could end up making a poor hiring choice because this would be your first time recruiting for this type of role. In addition, if you want to do brand work it also means hiring a person (even on a consultancy or freelance basis) who knows the media agency market.
Plus there is the inherent risk around the YouTube business model, where unless you get views, you don’t earn money. So this is the rather large issue of the revenue model of YouTube where there isn’t a reliable route to income, and therefore the risk of ended up out of pocket is not insignificant. And even then, the revenue to views formula is nowhere near what it costs to produce TV.
And so with that in mind, for those companies who have considered getting into YouTube and ruled it out, it may be the right decision. Although worth stating, not being on YouTube for TV production companies isn’t a neutral decision, and will more than likely have consequences in the longer term as the market for a broad range of buyers continues to either stagnate or contract. However, again, that doesn’t make it a wrong decision.
If you are a TV production company owner, now what?
YouTube is the natural platform for TV producers however being great at telling audio visual stories isn’t enough. To succeed also requires the development of some new skills (marketing, scheduling and community management), but much more importantly, it needs a hungry, committed and focussed attitude.
In other words, YouTube isn’t hard in the sense it doesn’t require you to become an engineer or learn a new coding language. Rather, it is hard hard work, and you’ll need to live, breathe and eat your channel to have a chance of success.
To succeed in this permissionless space requires a mindset of entrepreneurialism and seeing opportunities rather than barriers - indeed, many of the traits required to run a successful TV production company.
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I am finally going to be leaping into YouTube this year. Starting soon. I am really wanting to embrace the the mvp process. Test and release even if ,and especially if it’s not perfect.