Google Stock Heats Up the Video Streaming Wars

Google (NASDAQ: GOOGL  ) stock opened higher today, after the Financial Times reported that Google's YouTube may begin charging viewers for certain video channels as soon as this week. As of this writing, the stock was trading near a 52-week high of $858 per share . The Web search giant has been trying to find ways to monetize its video streaming service since it purchased YouTube in 2006 for a whopping $1.6 billion.

The story at this point is purely speculative, though Google said it is working on "a subscription platform that could bring even more great content to YouTube," according to the Financial Times. The alleged starting price for these special subscriptions is said to be around $1.99 a month, and would include up to 50 different channels.

This price point isn't bad compared to what the competition charges for streaming content. Coinstar's (NASDAQ: OUTR  ) Redbox Instant, for example, costs $8 a month for unlimited video streaming. However, the service also includes four DVD credits each month that subscribers can redeem at any Redbox location.

Still, price advantage alone won't help Google win the digital streaming wars. That's because Amazon.com  (NASDAQ: AMZN  ) , Netflix (NASDAQ: NFLX  ) , and Hulu are taking streaming to another level with original content.

Meet the contenders
Original content is key for these companies as they fight for consumer eyeballs. Last month, Amazon Instant Video began streaming 14 pilots free of charge in order to gauge audience tastes. Amazon now plans to collect viewer's votes on which original series it should produce. Meanwhile, Netflix's House of Cards is stealing the show. Moreover, Netflix CEO Reed Hastings said the show had a positive impact on subscriber growth in the first quarter -- a trend that should continue as Netflix rolls out new seasons.

Clearly, original content is king. Yet at this point, it is unclear whether YouTube's new subscription service will include such content. However, according to a report from CNN, Google has spent more than $200 million in the last year on advances to dozens of YouTube start-up channels.

Going forward, YouTube will need compelling content if it hopes to continue dominating the streaming market. Although, make no mistake, if the company can successfully monetize its YouTube platform, it would certainly move the needle for Google stock.

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other Web companies, it's also struggling to adapt to an increasingly mobile world. Despite it gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's premium research report on Google stock, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.


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  • Report this Comment On May 06, 2013, at 3:35 PM, Wingeddamnation wrote:

    Well, I guess a lot of youtubers will change their youtubing to google vidding in a matter of months. I sure as heck am not going to pay for a site that was free at one point; first they throw in the ads, and now this hot mess. This is what happens when a site starts letting money creep into their pockets children.

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