YouTube, the video site owned by Google, is in talks to buy Next New Networks, a Web video production company, according to two people briefed on the discussions. The acquisition would be YouTube’s first major foray into producing original content, and shows how intently YouTube is focused on offering professional shows, not just amateur videos and other short clips.
YouTube and Next New Networks have not yet signed an agreement, and the people would not disclose the proposed price. YouTube declined to comment and Next New Networks did not immediately respond to requests for comment.
As companies like Hulu and Netflix offer more shows and videos online, and as Google tries to lure people to watch YouTube on their televisions through its Google TV software, YouTube is increasingly focused on providing professional content and figuring out how to attract audiences and advertisers to the programming.
Next New Networks, a start-up based in New York, was founded in 2007 to create original Web television shows, and has found success with series like “Barely Political” and “Indy Mogul.”
A year ago, the company broadened its focus to also play a role similar to a Hollywood producer, by scouting new video creators and helping them distribute their videos, find an audience and make money, through the Next New Creators program. It now has 65 independent creators whose videos represent more than half of Next New Networks’s monthly viewership.
That production role is what YouTube is most interested in, said two people briefed on the discussions. Google has been hesitant about creating content, preferring to provide the platform for outside creators rather than compete with companies whose content it links to and hosts.
Asked last month if YouTube would consider acquisitions of Web video companies, Eric E. Schmidt, Google’s chief executive, said “You never say never. We’ve tried to not cross that line.” He noted that YouTube has helped finance Web video production in the past, “but to actually own the content is an important decision.”
“We’re always debating these things,” Mr. Schmidt added. “The good news right now is, there’s enough of these little digital studios that can raise capital,” and they see YouTube as a viable distribution point, he said.
In July, YouTube started playing a bigger production role itself, giving grants to some video creators to beef up their operations. It also helps with distribution and monetization for 15,000 content partners, and this month lifted the time limit on video uploads for many video creators.
Next New Networks has already been sending significant traffic in YouTube’s direction. In June, the start-up, which has raised $26 million in venture capital, including from Spark Capital, Fuse Capital and Goldman Sachs, celebrated a milestone that is unique to the Internet: the one-billion-view mark. Many of those views were racked up on YouTube, one of the key distribution points for Next New Networks.
“More and more people are heading home to watch online video instead of turning on their TV, and we’re playing an important part in that change,” the company’s then-chief executive and current chairman, Lance Podell, said at that time.
YouTube’s top two most-watched videos in 2010 were from Next New Networks video creators. The first, “Bed Intruder Song” by the Gregory Brothers — the group that uses Auto-Tune software to remix news clips — had 60 million views. The second, a parody of the singer Ke$ha called Glitter Puke, was from an original show by Next New Networks called “The Key of Awesome.”
In a company blog post this week, Ben Relles, head of programming and development for Next New Networks, said the company had figured out a few key things about video production on the Web that led to the success of those two videos. It looked outside for new creators, published video series and not just one-time viral hits, and tapped into distribution networks like YouTube, Facebook and Twitter.
In the recent interview, Mr. Schmidt predicted that production by small Web video companies and distribution on YouTube would be the television production model of the future.
A new television pilot costs $3 million, and video creators can create a lot of YouTube programming for that price, he said. “So what you should do is, instead of building your TV pilot, you should do $3 million worth of other stuff, let the audience pick the best one, and then go to the TV studios and say, ‘We’ve proven it on YouTube, now let’s go spend all that extra money.’”
