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Now we know what Google’s “big arse ideas” for YouTube, Web TV, and (maybe) Hulu are: build an alternative to cable.Last spring, news broke that Google would spend $100 million loading YouTube up with original content.
Two industry sources tell us that Google is actually spending much more than that acquiring content for YouTube – perhaps as much as $500 million or more.
“They are throwing around huge money,” says one of these sources, an executive who has found himself bidding against Google for video content.
“They’re fronting production costs to the tune of tens of millions of dollars per deal.”
This source says Google is sending out RFPs and striking deals with cable programmers, independent studios, and even people that aren’t primarily in the video business.
A second source, this one involved in Google’s acquisition talks with Hulu, says that the company’s initial outlays for content are indeed in excess of $100 million and that they could easily reach $600 million over time.
This kind of big spending on content makes sense out of Google’s bid for Hulu and all the TV and movie rights it comes with, doesn’t it?
Bring in the fact that Google just bought a big cablebox maker, Motorola Mobility, and the whole thing terrifies traditional media companies, including Hulu’s parents, Disney, News Corp, and Comcast.
Says one source: “You can imagine if Google were to buy Hulu and they were commissioning all this content and they were willing to take losses for a few years, that would become a real alternative to cable.”
Another source says: “Google is really going to move the needle, but it’s not going to happen instantly.”
“If you go back to when the cable channels launched in the US, nobody watched right away, but every day since then they’ve taken a little more share. [But] the 500 channel universe never happened. Now it’s going to happen. Google is forcing the organisation of video onto the Web.
We’ve emailed Google PR about this story and will update the story if we hear back.