Google's video-sharing website YouTube will start selling its brand new $9.99-per-month ad-free subscription service starting on October 28, Wednesday. YouTube Red service allows United States customers to watch original series and movies without advertisements, download videos for watching offline, and keep clips playing on a smartphone or tablet computer while people are using a different mobile app.
Another feature of the Red ad-free service will be Google Play streaming music. It challenges big players in music subscription services including Apple Music, Spotify and Tidal, According to Music Times.
Some industry trends and number crunching explain YouTube's new service. The ad revenue it earns does not cover the huge cost of showing billions of video clips daily, even though users upload most videos for free.
UBS is a Swiss-based financial services company. Its analysts calculated that YouTube could rake in $950 million yearly in new revenue if just 5 percent of U.S. customers signed up for the subscription.
Matthew Glotzbach is YouTube's vice president of product management. He referred to Red as the first step in a long journey, and the company expects strong demand.
YouTube's U.S.-earned net ad revenue is projected to slow quickly during the next three years, and its 2015 global net revenue is expected to be $43 billion this year, according to Los Angeles Times. That is a 41 percent surge from last year.
However, YouTube is facing major competition from rival companies that are siphoning off video viewers and makers. They include Facebook and Vimeo.
In addition, the ad revenue of many YouTube stars could be greatly affected by the Red subscription service. They rely on advertising sponsors to produce more viral videos of talking topics and their day-to-day lives.
Here's a hands-on for YouTube Red: