Why YouTube and Facebook are suddenly embracing traditional Hollywood

There was a time, not that long ago, when you could accidentally stumble upon one of your favorite films on YouTube. In almost every instance, the movie had been uploaded illegally (sometimes with a misleading title to ward off the IP owners), and it would disappear from the platform after a few days, leaving behind a notice that it had been removed for copyright violations.

In the future, you’re going to continue finding some of your favorite films on YouTube, only now they’ll be there legally. It was reported last month that the company had licensed about a hundred well-known films, including Rocky, Terminator, and Legally Blonde. These movies don’t exist behind any sort of subscription paywall, but rather are fully ad-supported and free.

YouTube isn’t alone. Facebook recently announced it also would begin licensing traditional Hollywood fare, starting with Joss Whedon’s oeuvre of TV shows — Buffy, Angel, and Firefly. All 268 episodes will sit within Facebook Watch, and the platform even hired Buffy star Sarah Michelle Gellar to shoot promotional videos for the feature.

While licensing old TV and film content is common on subscription platforms like Netflix and Amazon Prime, this is the first time these two ad-supported behemoths have devoted significant resources to this kind of IP. Given the sheer volume of content uploaded to their platforms every day, by both professional and amateur creators alike, why are they bothering with decades-old film and TV?

This new strategy is likely reflective of the struggles the platforms have had building out two services — Facebook Watch and YouTube Premium — that were meant to generate the kind of episodic, premium content that can be found on traditional TV. Unlike the low-budget video that’s typically uploaded to Facebook and YouTube, this episodic content would demand higher rates from advertisers and, in the case of YouTube Premium, entice viewers into paying for a $12 monthly subscription.

That was the plan, anyway.

Let’s start with Facebook Watch. The feature launched last August, hosting hundreds of shows that were walled off under a special tab, most likely because Facebook wanted to differentiate it from the one-off viral videos that appeared on its pages. Facebook executives hoped Watch would become a destination for users who would deliberately visit it to binge watch episodic videos.

Only that doesn’t seem to have happened. In the year after it launched, those in charge of greenlighting projects at Facebook Watch communicated an ever shifting slate of priorities to publishers, many of whom experienced whiplash as they struggled to adapt. Facebook began to scale back on the number of shows it commissioned while, at the same time, shelling out more money for each individual show. It placed greater emphasis on celebrity-led shows that leveraged their star power to drive viewership. In June, it started ordering more shows that had some kind of interactive element, whether it was generating discussion in Facebook Groups or maintaining fictional Instagram profiles for a show’s main characters.

It also restructured the deals themselves. At the beginning, video creators owned their IP and Facebook only required an exclusive window for a few weeks before those creators could begin distributing videos on other platforms. By November of last year, it was demanding up to a year of exclusivity.

In May, Facebook Watch started heavily investing in news programming, paying publishers around $1 million a year to produce weekly shows and up to $10 million annually to put out daily content. By this point, it had begun to leak out that Facebook was having trouble monetizing its Watch content with midroll ads. According to Digiday, executives had expressed “disappointment in the overall quality of much of the programming done for Watch.” Publishers, on the other hand, weren’t all that impressed with how Facebook was handling things. “There just doesn’t seem to be a clear vision there,” said one.

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Things for YouTube Premium weren’t going all that smoothly either. For starters, the service has had significant branding issues. What started out as YouTube Red in 2015 was renamed YouTube Premium this year, and there are several services — Google Play Music, YouTube Music, YouTube TV — that have overlapping features, muddying the waters further.

Subscribing to YouTube Premium for $12 per month affords you three main benefits. The first is access to all YouTube content without ads. Second, there’s a music library comparable to what can be found on streaming services like Spotify and Apple Music. And third, you get to view show content that was specifically created for the service.

It’s this third benefit on which YouTube has placed much of its efforts in enticing users to subscribe. At first, the strategy seemed to focus on paying the site’s homegrown stars to create exclusive content that would exist behind the paywall. Eventually, this approach hit a snag when two of the platform’s biggest stars — PewDiePie and Logan Paul — found themselves mired in controversy. In both cases, YouTube had to either cancel or table the content these two had been creating for YouTube Premium (though Paul did eventually see his film released on the site).

YouTube also signed deals with more traditional stars like Ellen DeGeneres, Will Smith, and Kevin Hart. But the service struggled to gain paying subscribers. A year after the launch of YouTube Red, it reportedly only had 1.5 million subscribers. Publishers with revenue sharing agreements that rewarded them for the amount of time spent watching their content reported that only a small percentage of their income came from YouTube Premium.

Then, last month, YouTube announced it would no longer lock any video content behind the YouTube Premium paywall. All existing and future series would be available on the platform’s free, ad-supported version. YouTube Premium would continue to exist for now, but how many people would pay $12 a month just so they could watch videos without ads?

Suffice it to say that these two services, Facebook Watch and YouTube Premium, have struggled with gaining mainstream adoption. The companies seem to be learning what nearly every television executive could have told them from the beginning: while creating viral content isn’t all that difficult, launching big-budget, episodic shows that millions of people will seek out and watch is incredibly difficult.

And that brings us back to the movie and film rights the tech platforms have secured. Though the IP isn’t exactly fresh (Buffy hasn’t produced new episodes since 2003), content like this can be incredibly valuable for driving repeat viewership. Just ask any cable channel that syndicates Seinfeld or The Big Bang Theory. Or hell, just ask Netflix why it paid $100 million to secure the rights to Friends.

Does this mean that YouTube and Facebook have abandoned funding original content? That’s unlikely. But their biggest hurdle at the moment is turning their premium services into a daily habit for consumers, and nothing does that like some hot Buffy on Angel action.

And once Facebook users become more aware there’s a separate tab that’s hosting a wealth of episodic content? Maybe they’ll decide to stick around and stay for a while. Just as TV networks will debut new series at the tail end of their most popular primetime shows, YouTube and Facebook are hoping that traditional Hollywood film and television will be the gateway drugs that transform their services into a daily destination.

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.

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