Why YouTube killed Originals but let Premium live

For a hot minute, YouTube wanted to be a creator in the mould of Netflix and Prime Video. While the closure of its Originals platform in January marked the end of that dream, it also meant that YouTube was going back to familiar grounds—ad revenue from user-generated content. But this time, its monetisation strategy has ad-free subscription plans in the mix.

YouTube is reworking its subscription strategy, moving away from the pitched battlefield that the original content space has become

The company’s shuttering of the Originals division was seen by many as a sign of its return to its strengths as a content hosting platform

But new grounds remain to be explored: India’s music streaming ecosystem holds great potential, and YouTube, with its two billion monthly active users, has special advantages

The company is tinkering and reshaping its paid offerings constantly, even as its advertising revenues climb every year

When YouTube shuttered its YouTube Originals division in January 2022, it was a signal. The video streaming giant was going back to its roots, back to what it does best—being the world’s largest platform for user-generated content (UGC) and making enormous amounts of money from advertising. It was a retreat from “an attempt at producing content,” according to a former executive at YouTube India.

YouTube’s subscription offering, called YouTube Red when it launched in 2015, was ad-free and had exclusive, originally produced shows that it branded as YouTube Originals. The division was seen by many in the industry as YouTube’s parent company Alphabet dipping its toes in the Subscription-based Video On Demand (SVOD) format.

YouTube Originals produced shows with mainstream actors and production houses, like Cobra Kai, a sequel to the 1984 movie Karate Kid. More importantly, it worked with homegrown YouTube stars to create shows like Retro Tech and Mind Field. The latter was fresh ground. YouTube was flexing a muscle no other streaming service had—its creator ecosystem.

A YouTube Red subscription would also give the user access to YouTube Music, Google’s second major audio streaming service after Google Play Music. With millions of songs and music videos already hosted on the site, it was a sweet deal. In 2018, Google renamed YouTube Red into YouTube Premium.

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However, YouTube couldn’t entirely escape its DNA. “YouTube has always thought of itself as a tech platform, built to host and share content,” said the former YouTube India executive quoted earlier. This former executive and others in the industry The Ken spoke to requested anonymity as they didn’t want to be seen publicly commenting on the company.

Originals struggled to pull the kind of fan bases and accolades that rivals like Netflix and Disney+Hotstar had done with shows like House of Cards or Game of Thrones. Its over-the-top (OTT) streaming rivals went on to produce critically acclaimed foreign language hits, including in India, but Originals—even with its list of dramas, animated series, documentaries, and game shows under its belt—was nowhere to be found.

“Producing original content requires a great deal of research and investment… to understand large and diverse international markets like India, it takes a lot of trial and error,” said a senior executive at an OTT service provider.

Eventually, YouTube decided to make some of its original content available to free users, running ads on them. When Originals shut, YouTube’s global yearly revenue from advertising alone was a cool US$29 billion—roughly the same as Netflix’s total yearly revenue revenue Wall Street Journal Netflix's income statements Read more .

AUTHOR

Soumyajit Saha

Soumyajit covers the operations of Big Tech companies and OTTs in India. Before The Ken, he covered equity and currency markets in Southeast Asia, Australia and New Zealand for Reuters. You can hit him up via email about anything, except money he allegedly owes you.

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