May 29th, 2014 by Maria Minsker

The rumors are true–it looks like Yahoo is gearing up to launch a YouTube-esque video channel this summer. According to AdAge, which first reported the news, Yahoo has been interested in building its own streaming video site since March, when the company began approaching some major content creators that are currently partnering with YouTube.  But the company’s video endeavors didn’t start there.

Last year, the company tried (and failed) to acquire video sharing Web site DailyMotion for over $300M, and CEO Marissa Mayer pretty explicitly discussed her video-oriented plans at TechCrunch Disrupt earlier this month. Given the growth of popular apps like Vine, Vimeo, and YouTube itself, video is booming, so Mayer hopes to get in on the action by monetizing on a seemingly sure-fire way to generate revenue–video ad spending. And it seems like the company isn’t wasting any time.

Yahoo has already signed an exclusive deal to run Saturday Night Live content, hired TV sweetheart Katie Couric to play a role in Yahoo’s broadcast efforts, and acquired Tumblr, leading some to speculate that the blog hosting giant could play a role in video distribution. Yahoo has also said that it may dip its toes into the production of original content, given the popularity of shows like Orange is The New Black, Netflix’s original program.

But is Yahoo on the right track? That depends on whether or not they can bring something unique to the table. “Yahoo is trying to replicate what has already been done (successfully) by the ad industry’s leading giant, instead of relying on its own strength, which lies in content creation and monetization, Gil Regev, vice president of marketing at MassiveImpact, a mobile-performance platform, says. “While innovation can rely on existing technologies, it implies an ingenuity, which Yahoo is still failing to show; unless they are planning on developing a new way of creating/ presenting/ individualizing video, I don’t see the dramatic effect this is going to have on the future of advertising. AOL has tried to play this field before and failed. Yahoo should take advantage of its expertise in content dissemination and leverage this phenomenon, while figuring out a way to make a dime out of it,” he adds.

What Yahoo needs to carefully consider is its advertising model, which could be what sets it apart from the long shadow YouTube has cast.  “If Yahoo’s anticipated rival to YouTube achieves success it may become the platform of preference for advertisers since Yahoo is planning on providing more of the advertising profit to the advertisers rather than YouTube which takes 45% of the ad revenue,” Oren Barzilai, CEO of convertiFIRE, a Web page modification solution, says. Still, it’s unlikely that YouTube will take this sitting down. “Yahoo’s entrance in the marketplace will also force YouTube to lower their percentage of profit from ad revenue to keep their standing with advertisers,” Barzilai adds.

So who will win out in the end? It’s pretty clear, according to Barzilai: “The competition will work to the advertisers’ advantage,” he says.

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