Ex-Hulu CEO Kilar unveils Vessel, paid online video service
Former Hulu Chief Executive Officer Jason Kilar has signed up YouTube stars, major media companies and celebrities including Alec Baldwin for a new subscription video service called Vessel.
Vessel will offer some exclusive programs and early access to clips from popular Internet entertainers like Ingrid Nilsen and Rhett & Link for $2.99 a month, Kilar said in an interview. The goal is to lure fans who don't want to wait three days for videos to appear on YouTube. Vessel also will offer a free service with more content, such as music videos from the major record labels and videos from Funny or Die.
Vessel is one of several companies trying to charge customers for short-form videos they currently see for free. Otter Media Inc., backed by former News Corp. executive Peter Chernin, has acquired stakes in two companies, Crunchyroll and Fullscreen Inc., that offer or plan similar services.
"If you are using the Internet exclusively to distribute your video, you can become popular, you can often times build a brand and a following," Kilar said. "It's much more difficult to build a business on the basis of video alone. That's a massive problem, and it needs solving."
Creators and business partners can sign up for the service, said Kilar, who was the founding CEO of the Hulu video- streaming service. It will open to the public early next year. Both the paid and free versions of Vessel will include advertisements. The company has signed Old Navy and Jaguar Land Rover Automotive Plc as sponsors, he said.
Business Model
The challenge is to appeal to viewers accustomed to watching for free and creators who are nervous about cannibalizing their audiences on YouTube, where many have built fan bases. Some owners of popular YouTube networks have complained about how little money they receive from advertising on the Google Inc. video service.
Short-form video has been too dependent on one business model, Kilar said, noting both the film business and TV businesses have created several different windows for collecting revenue. Kilar, a former Amazon executive, and his colleagues refer to Vessel as "the web's first window."
Creators will receive 70 percent of the ad revenue and 60 percent of subscriber fees, with their shares of the latter tied to audience size. Most of the videos that appear first on Vessel will be available later on other sites. Baldwin is producing a Web series called "Love Ride" and has given Vessel exclusive rights to future episodes.
Kilar said he and former Hulu colleague Rich Tom provided the seed money for the company before raising $75 million in a round led by Benchmark Capital, Greylock Partners and Amazon founder Jeff Bezos.