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YouTube Red Unveiled: Ad-Free Streaming Service Priced Same as Netflix

Google’s YouTube took the wraps off its subscription-video service, dubbed YouTube Red, which doesn’t carry any ads. But despite a smattering of 10 original series like “Scare PewDiePie” starring YouTube’s biggest star and bundling of a music service, it’s likely to face an uphill battle to sign paying customers.

The YouTube Red $9.99 monthly price matches the current subscription price of Netflix’s standard two-stream HD plan. And the question for many in the industry, even among YouTube’s most loyal partners, is whether it will get any significant traction among users who have been trained for 10-plus years to expect free video on YouTube.

“In the first decade of YouTube, the way we derived revenue was advertisers told us what the viewers’ eyeballs are worth,” said Robert Kyncl, YouTube’s chief business officer, speaking at a press event held in L.A. Wednesday. “In this case, it’s the user saying over time what those videos are worth.”

One interesting wrinkle: If someone signs up for YouTube Red via the Apple iOS app, the service is priced at $12.99 per month. That reflects the so-called “iTunes Tax” of 30% that Apple charges app publishers for content and services purchased through its devices.

YouTube Red is slated to launch Wednesday, Oct. 28, with a one-month free trial offer. Initially the service is available only in the U.S., with additional markets slated to roll out in 2016. In user research conducted when deciding on a name for the service, execs found the term “red” was highly associated with YouTube.

In addition to watching videos without ads, the $10 service also lets users save videos to watch offline on phones or tablets as well as play videos in the background. Also included is a redesigned version of YouTube Music, which works with Google Play Music, so subscribers to each service automatically gain access to the other. The new YouTube Music service, which replaces the Music Key beta, is designed to provide better discovery tools. For example, by choosing any song or artist, a user can stream a customized playlist culled from YouTube’s music catalog.

YouTube says it has agreements with 99% of content providers that have agreed to participate in YouTube Red. “The overwhelming majority of them have spoken,” Kyncl said. As with its standard ad revenue-sharing program, YouTube will pay 55% of subscription revenue to partners, divvied up based on aggregate subscriber viewing time.

For YouTube Red, some content partners balked at what they saw as a high-handed attempt by YouTube to dictate the terms their content would be available via the SVOD service. But most have come around after YouTube informed them their content would be made private in the U.S. if they didn’t sign on for Red.

Exclusive original content in YouTube Red will debut starting in January. The slate is being overseen by global head of original programming Susanne Daniels, previously head of programming at MTV.

The new series and movies are:

“Scare PewDiePie” (pictured above): In the reality-adventure series, PewDiePie (real name: Felix Kjellberg) from the creator and exec producers of “The Walking Dead” at Skybound Entertainment and Maker Studios, experience thrills, chills and laughter as PewDiePie encounters terrifying situations inspired by his favorite video games.

“Sing It!”: From the Fine Bros. (who created YouTube’s React franchise) and Mandeville Films, 10-episode scripted comedy satirizes the reality singing competitions that have become a centerpiece of pop culture.

“Lazer Team”: Feature-length action-comedy from Rooster Teeth and Fullscreen Films focuses on four small-town losers who stumble on an alien ship carrying a mysterious cargo, leading to a battle to save Earth from an all-powerful enemy.

“A Trip to Unicorn Island”: From Judy McGrath’s Astronauts Wanted, feature-length documentary gives fans a look inside the life and journey of Lilly Singh (YouTube’s Superwoman) as she embarks on a 26-city global tour where she has to remember to practice what she preaches: happiness is the only thing worth fighting for.

Untitled Joey Graceffa project: Reality murder-mystery series starring Graceffa brings together an ensemble of top YouTubers who must form alliances to survive… but little do they know that most won’t make it out alive.

360 Project from MatPat of Game Theory: YouTube educator and pop-culture expert MatPat from The Game Theorists hosts a 360 virtual-reality series exploring the real-life science behind popular video games by throwing gamers into scenarios they play through every day, from water jetpacks to haunted pizzerias.

“Single by 30”: In romantic drama series from Wong Fu Productions and New Form Digital, two high-school best friends make a promise to get married if they’re still single at 30. A decade later, their attempt at upholding their vow unfolds in unexpected ways. Starring Harry Shum Jr. and Kina Grannis.

Untitled CollegeHumor project: Written by and starring the cast of CollegeHumor, along with special guests, this new anthology series will take a dark and comedic look at the absurdity of Internet culture.

“Fight of the Living Dead”: Reality show from Alpine Labs takes popular YouTube talent and traps them in a real-world zombie apocalypse. They must use their instincts and gaming skills to survive as they battle the elements for the ultimate prize of survival.

“I Am Tobuscus”: Scripted comedy from Toby Turner (aka Tobuscus) explores the world of a self-involved YouTube creator pursuing bigger stardom. The show features original music, and satirizes the digital stardom.

YouTube Red is a shift from the video site’s previous run at original content, and it’s a bet that the company can assemble a lineup of exclusive, youth-skewing material that will prompt people to open their wallets. To be sure, with more than 1 billion monthly users worldwide, YouTube could make the new SVOD service pay off with just a fraction of them deciding to fork over 10 bucks each month.

Another key strategy behind YouTube Red: the site’s desire to keep some of its biggest creators in the YouTube fold amid a rise in competitive video platforms, by offering them a new way to make money from longer-form, higher-budget projects. Services like Vessel, Vimeo and Verizon’s Go90 have been actively courting YouTube content creators, promising bigger checks in return for exclusive distribution, while Facebook has aggressively stepped up its push into video.

As for whether YouTube Red could siphon views away from the free, ad-supported side — and make it less attractive to big marketers — Kyncl said “that would be a high-class problem to have.” He said even if the subscription-based service wildly exceeded uptake expectations, it would still have only a minimal effect on ad revenue YouTube generates.

With the previous YouTube Originals initiative, launched in 2012, Google spent some $200 million funding content for about 100 channels in exchange for a year of exclusivity. Those productions were all available for free on the ad-supported platform, and YouTube claims the project was a success: The funded channels now generate more than 1 billion views per month, and around 80 of the channels are in YouTube’s top 1% based on subscribers (with about 30 topping 1 million subs).

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