Cheddar is a bargain for YouTube TV today — but it will cost them in the long run

In a digital deal with the devil, YouTube TV partnered with a free digital video news company called Cheddar to win the race for TV-streaming dominance.


April 19, 2018

To expand its content catalog to rival Old Man Cable’s, YouTube TV added its first online-only channel, Cheddar — a financial news outlet patronizingly dubbed “the CNBC for millennials.”

YouTube TV combines cable and digital content in one place, but while having as much content as possible may benefit them in the long term, the question is, who’s gonna pay for it, and how?

‘Content a la carte’

The future of TV is over-the-top: Entertainment is migrating from the cable box to the internet. But the transition won’t happen overnight, and streaming platforms must appeal to teenage Twitch-streamers and cable-crushing grandmas to win the war for TV.

Adding multiple entertainment formats increases YouTube TV’s market share today, but non-exclusive content like Cheddar’s — which publishes its content elsewhere for free — erodes the subscription’s long-term value to viewers.

This revolution WILL be televised (thanks to free distribution)

Back in the day, cable producers made half their money in ads — and the other half in “distribution fees.” Now, digital producers make all their money from ads — meaning YouTube TV still pays old-school cable partners, but doesn’t pay Cheddar anything.

So in the short term, YouTube gets Cheddar’s content fo’ free — but in the long term, Cheddar gets valuable viewers (AKA live prey for trigger-happy advertisers). Cheddar’s $54m in funding — plus a cool $18m lined up in ad revenue — should pay the bills as viewership grows.

Meanwhile, YouTube TV jacked up its subscription from $35 to $40 — kinda pricey compared to watching Cheddar for free on FB…

Daily briefings, straight to your inbox

Business and tech news in 5 minutes or less

Join over 1 million people who read The Hustle

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.