YouTube, and its parent company Google, are the competitive forces that have challenged the movie industry. YouTube is the number one video site on the internet with over 100 million video views daily. Google is the number one search engine on the internet. These competitive forces have created problems for the movie industry. Illegal posting of copyrighted movies and television programs. In fact, the industry claims that 30 to 70 percent of the YouTube content is comprised of illegally downloaded videos. These problems have caused the movie and television studios to make changes in how they do business. Several of the major firms entered into negotiations with YouTube in order to create licensing that would enable copyrighted material to be shown legally. Furthermore, the movie firms have established an agreement to "claim" the copyrighted materials on YouTube, run promotional ads for the movies, and recoup the revenue generated from the ads.
The disruptive technology has had a significant impact on this case. The ability to quickly download material, and have it permeate the web, was extremely disruptive to the movie industry. Having the movies readily available on YouTube, or other "bootleg" resources, cut into the revenue of the production firms. Movie firms generate their revenue from movie theaters and movie rentals. Gaining free movie access through YouTube bypassed the traditional movie revenue generators, and ate away at the potential volume and profits that they could have gained.
Initially, the movie studios viewed YouTube as an enemy. Viacom sued YouTube for $1.6 billion for 150,000 copyrighted violations that they found on the YouTube site of their material. Ultimately, the studios have partnered with YouTube in order to hinder the illegal download market on their site, and generate revenue for YouTube and the movie studios. The goal of the response was to curtail the revenue loss caused by the illegal downloads. The movie studios elected to utilize YouTube in the same way that the music industry has utilized them. The music industry has utilized the YouTube site to promote artists, videos, and products. The movie studios have learned that utilizing the YouTube site in the music manner will boost their presence, frustrate the use of illegal downloads, and enable YouTube and the studios to generate revenue from the illegal downloads by posting ads at those locations.
I think that the residual benefit of promoting YouTube to promote their new films, will always be residual. Any advertising is good advertising, and it gets the word out to familiarize the public with the product so they would want to watch. As long as the revenue generated from the ads is greater than the cost, then I think the movie studios should continue to use YouTube.