Background on YouTube

In the past couple of years, we have seen how fast technology advanced in many ways. In the 21^st century alone, we have seen the increasing availability and use of cellular phones with image and video capture capabilities; the replacement of film cameras with digital cameras equipped with memory cards and have video capture capabilities; the decrease in prices of video cameras and the use of memory cards instead of tapes; the increasing storage space in computers (from 40GB to hundreds and now even thousands of gigabytes); and the use of USB ports for transferring videos to computers instead of firewires, which greatly increased the transfer speed of data. All of these factors combined to influence more people to take videos of themselves rather than just pictures.

However, taking videos of oneself or of one’s friends and families doesn’t make sense if one cannot share it with others. Sure, one can share it by burning the file onto a CD and having it distributed to his friends and family by either meeting up with them or sending it through FedEx. But this process takes time and costs some money.

A cheaper alternative for sharing videos is through the Internet. The Internet has become very popular among people that even people in the lower-income brackets have access to it through Internet Cafes. Because of this popularity, it has become a venue for social networking all over the world and has made networking sites such as Friendster, MySpace, Facebook and the like to flourish.

But sharing videos through the Internet has always been challenging. To share a video, people would usually either send it through email or get a webhosting account. But videos usually take a huge space off one’s hard drive, and emailing videos is almost impossible because of the file size limit set by email providers. Most people then sign up for a webhosting account where they can upload their videos and after which send the link of the file to their friends via email so their friends can download them. After which, they could watch the videos through Windows Media Player in their PCs. Or for those who know how to use HTML (Hypertext Mark-up Language, the script used for creating websites), they could create their websites, have the videos embedded on a certain webpage and have the website address sent to their friends. Their friends could then just stream the videos through the website. This process, however, is as good as downloading as the files are huge and therefore cannot stream smoothly.

Moreover, it takes time to upload and download videos, and it is almost impossible to find a free webhosting service that would make room for large video files. Most of the free webhosting sites only offer an average of 15 MB of web space for subscribers to use. If users wanted to upload videos which have an average size of 10MB/minute for a WMV/MPEG/MOV/AVI/MP4 file, then it would be impossible to do so. But should they insist, they could sign up for a paid account offering Gigabytes worth of web space for an average monthly fee of $20. But this price tag doesn’t seem too reasonable just so one could share his videos and have a website that does not generate revenue. Also, not everyone knew how to write HTML and create a functional and good-looking website, so most people just resorted to not sharing videos at all.

But with the introduction of YouTube in 2005, the problems of video sharing were solved. YouTube first and foremost came up with a technology that allowed consumers to easily upload their videos. Now, there is no need to worry about file size limits—a registered user can upload 10 minutes or 100MB worth of videos at a time. It usually just takes 1-5 minutes/MB to be uploaded depending on one’s Internet connection—which is faster than uploading a 100 MB file in a normal website provider. There is no need to learn complicated HTML scripts just to create a functional and attractive website—once a person becomes a registered member, he will have his own ready-made webpage where YouTube automatically displays/embeds his videos for him. There is no need to worry about fees because registration is free. Through their technology of converting MPEG, MOV, AVI, MP4 and WMV videos to FLV (Flash Videos), they were able to make the videos “lighter”, which meant that it would take less time to download it, hence allowing it to literally stream when displayed on the website.

Furthermore, YouTube understood the purpose of consumers for uploading videos in the first place—that is to broadcast them to other people and have people react on them. YouTube offered a venue for social networking through their various features such as: “Comments” and “rate” feature where other users can express their opinions on certain videos by either rating them or typing their opinions; The “subscription” feature which allowed users to subscribe to each other’s videos and be updated whenever a new video by that user is added; “Add to Favorites” or “Flag this video” feature which allowed users to add a certain video to their playlist or to ban a certain video respectively; and “Mail” which allowed users to receive and send videos and messages to each other. Moreover, YouTube allowed users to add tags to their videos when being uploaded so that it can easily be found when any of its tags is entered in their Search Engine.

As of now, YouTube is still the number one Internet video hosting site, with over 100 Million Video Clips being viewed per day all over the world. Even other social networking sites allow its members to upload videos to their sites from YouTube. Its success can be attributed to its combination of ease-of-use technology with social networking features, strengthened by the emerging trends in technology today.

4-Action Framework

YouTube’s case falls under Path 6 or Time/Trends of the 6-paths framework of remaking market boundaries. Below is the four-action framework that YouTube applied for its Blue Ocean Strategy.

1. Eliminate

· Need for HTML know-how

· Hassle of undergoing numerous steps just to upload/display a video in a website

· Fees for having a huge web space

2. Raise

· Upload and Download speed

· Amount of web space allotted for each user

3. Reduce

· Time spent by users uploading or downloading videos

4. Create

· Ease of use technology for uploading and sharing/displaying video files

· The use of FLV technology to stream videos

· A ready-made website for each user

· Venue for social networking through various features (i.e. comments, subscribe, mail, etc.)

· Video tags and Search function

Strategy Canvas

Below is the Strategy canvas for YouTube as compared to a regular paid webhosting service.