Market Insight

YouTube to introduce offline viewing function

September 24, 2013

Irina Kornilova Irina Kornilova Manager – Research & Analysis, Broadband Media, IHS Markit

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YouTube is to introduce a download-to-device option for users in November 2013. Option will allow users of the service to download specific videos to their smartphones or tablets for offline viewing for up to 48 hours. Full details of the offline viewing mechanism have not yet been released, but more information is expected in the run-up to the November launch.

Mobile views account for over 25 per cent of global YouTube consumption at present, and the download option will only have a positive impact on this proportion. Other services have seen significant increases in consumption following the launch of a download option. BBC iPlayer, for instance, registered a near-doubling of mobile-based consumption; from 21 per cent in July 2012 to 38 per cent in July 2013, spurred on by the availability of a download facility.

The offline viewing feature is an increasingly common function for long-form online videos services - in the UK, the BBC introduced this function in September 2012 for iOS devices and year later for Android devices. Commercial broadcaster Channel 4 has also been providing a similar option since July 2013.

YouTube is still developing its presence in the professional content and long form video space, and we see this update furthering the company's efforts in this area. Other initiatives which have been  established to help drive this vision include the addition of pay channel subscriptions, live streaming options for content partners and, more recently, the addition of the playlist function, which allows users to build, change and update lists of videos on their smartphones.

Downloaded content will be available for up to 48 hours, a shorter period that that typically permitted by other content providers. The UK's BBC and Channel 4 allow videos to be stored on a device for up to 30 days, although once played, the file is available for just 7 days.

A key issue with the offline viewing function will likely be the lack of adequate content discovery - the user will need to make a choice of what to watch prior to download, and prior to viewing. This is likely to have a more significant impact on UGC and short-form content partners, which often rely on accidental discovery, rather than the "appointment to view" long-form video providers.

The selection of partner content which will be available to download is still unknown, as YouTube is allowing partners to decide whether they want their content to be available for offline viewing. YouTube's top network Vevo has already pulled back from the initiative, partly due to its licence agreements with music labels. Vevo channels alone generate over 3bn views a month. YouTube's premium content - long-form movies and TV content available in selected countries - will also likely be subject to similar restrictions from studios.

Whether other partners choose to do participate or block the feature will be partly contingent on YouTube's choice of how to finance offline viewing.

In order to support the new feature, YouTube will most probably use its traditional pre-roll advertising mechanism - videos will be downloaded together with the pre-roll advertisement. However, with the likely longer-form nature of the videos which consumers will be watching, combined with the more captive audience (offline viewing is likely to mean the consumer has limited other entertainment choices) YouTube could look to adopt a more aggressive advertising strategy. Such an approach could be as straightforward as that adopted by Channel 4, which launched a download option earlier in 2013 and struck a six-month sponsorship deal with Nissan to help support the launch. But longer term, once viewing patterns are clearer, additional ad-spots, pre-rolls or other advertising formats could be considered as additional funding mechanisms.

But in support for ad-funding, measurement, and critically, auditing of audience measurement, remains a grey area. YouTube will undoubtedly be registering consumption offline, and synchronising the statistics centrally once the user's device reconnects to a network; however this consumption will likely remain a black hole for audience measurement firms and auditors, and thus advertisers may have to rely entirely on YouTube's own statistics. Inventory management may also be an issue - ensuring that time-sensitive advertising remains relevant at the time of viewing is important - however with the short viewing window, this is unlikely to pose a significant problem.

As a consequence of the various issues indicated above with the download model, the offline viewing function is unlikely to cause significant ripples in the online video market; however it is indicative of the general industry trend for permitting users to continue to watch content and forms yet another small part of YouTube's professional content push.

Geography
World
Organization
Google Inc. YouTube
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