YouTube is building a system that allows users to subscribe to streaming services through the YouTube app, The Wall Street Journal reported, and was able to launch the so-called “channel shop” already this autumn. The JournalThe report did not say which services might be part of the store, only that YouTube has been talking to various entertainment companies.
A channel store makes perfect sense for YouTube and has been in the works for a long time: The information reported a similar plan way back in early 2020. More recently, the company has signaled that this is coming: “I think if content is distributed in a bundle, or where over time we explore other ways to distribute it, I think YouTube can be a good partner there,”[ads1]; Christian Oestlien, YouTube’s VP of product management, said recently The Verge. “We’ve never seen the world as these binary choices between us and partner services … we think everyone can coexist in a very healthy way.”
This is now perhaps the most popular idea in the streaming industry. Tech companies, especially those that have tried to create their own original content and seen how difficult (and expensive!) it is to do so, decide they are better off handling everything but the shows and movies. You already have an account with Verizon or AT&T, for example, and a bill you pay them each month, so your carrier can present itself as a valuable marketing partner and subscription infrastructure provider. It’s a lot like the old cable bundle, only… internetified. And the upside is the same for app store vendors and game stores: a small slice of everything you buy.
Apple, Amazon and a host of others all make this case, and often to great effect. HBO Max gained 4.5 million subscribers through Amazon Channels Journal reported, and briefly bailed on that partnership, but now reportedly plans to return. Even Walmart is reportedly thinking about getting in on the game.
However, YouTube may have the strongest case of any channel store partner. It has a huge audience, upwards of two billion people a month, many of whom already have an account and a credit card saved on YouTube. They already have the app downloaded, they can even already watch Peacock or HBO shows one clip at a time – it’s an easy upsell to get them to subscribe to the service. (YouTube also has the best video player and app on the market, which doesn’t hurt its users.)
YouTube even has some of this platform already built out. YouTube TV is already a channel store to some extent; you can subscribe to HBO Max, Starz, Showtime and other channels and services right from the YouTube TV interface. You can buy and rent movies directly on YouTube too, and watch some for free. Recently, the code in the Google TV app suggests that 50 free TV channels are coming to the platform.
To some extent, this also feels like a final admission that YouTube cannot compete directly with the Netflixes and HBOs of the world. The company has long looked for ways to create and offer more premium content, including a handful of ill-fated attempts to create TV-style original content. (RIP, YouTube Originals.) YouTube is already the place for clips and highlights from TV shows and movies, but hasn’t found good ways to integrate premium Hollywood content into the platform.
To make this work, YouTube needs to convince streaming services that it’s not a long-term threat to their business; YouTube’s relationship with Hollywood has improved over the years, but many entertainment companies still see it as both a partner and a necessary evil. While Apple and Amazon have competitive services, they don’t represent the existential, paradigm-shifting threat to the TV and film industries that YouTube does. How the Peacocks and Paramount Pluses of the world will weigh the value of YouTube’s massive audience versus the competitiveness of its content will go a long way in determining whether YouTube can be the channel store it hopes to be.
Everyone is going to want to be the channel store going forward – it’s the app store model all over again, and there’s a lot of money at stake. But if YouTube can pull it off, it could be even more than that. A YouTube app with all your streaming shows and movies, everything you can buy and rent, plus all the creators you love and the search engine to back it all up? It would be the most powerful app in entertainment, and it wouldn’t even be close.