YouTube introduces ad-free subscription service

SAN FRANCISCO — YouTube generates billions of dollars a year running ads in its vast repository of music, video game and how-to videos. Now, the video site and its parent company, Google, are hoping users will be willing to pay for the privilege to watch the same videos without ads.

YouTube on Wednesday unveiled a new US$10 (S$14)-a-month subscription plan called Red that combines ad-free videos, new original series, movies from top YouTubers such as PewDiePie, and on-demand unlimited streaming music. The plan will be available from Oct 28.

Red builds on Google’s existing music-streaming service by providing ad-free access to YouTube programming, along with features such as the ability to download videos to mobile devices and have music playing in the background while using other mobile apps.

It also targets YouTube fans who want to skip ads while giving them a chance to pass along some cash to their favourite video creators, who will share in the new revenues.

“People are embracing paid subscriptions for ad-free content at an incredible pace,” said Mr Robert Kyncl, chief business officer at YouTube.

Wringing more money out of YouTube is crucial to the success of Google’s larger Alphabet group, said Mr Jitendra Waral, an analyst at Bloomberg Intelligence. YouTube, the undisputed king of the ad-supported Web video market for most of its existence, has spent the past couple of years combating more vigorous competition.

YouTube Red will help differentiate YouTube from ad-supported rivals such as Facebook, and bring Google more directly into competition with paid streaming services from Netflix and Hulu.

YouTube has become one of Google’s big growth drivers, generating US$5 billion to US$10 billion in revenue, according to estimates by analysts. The research service eMarketer predicts YouTube will generate US$9.5 billion in ad revenue for Google this year.

“YouTube is one of the three pillars of Alphabet,” said Mr Waral, citing the economics of ads viewed on mobile devices and new cost controls being introduced. A streaming service will be “an additional revenue stream, rather than a surrogate revenue stream”, he said. Agencies