Yahoo to challenge YouTube

(Photo: Yahoo! Inc.)The Sunnyvale offices of Yahoo!, Inc.

Reports are rife that Yahoo is about to launch a video site it expects will give Google's YouTube a run for its money—probably in the next few months.

A story on the website Re/Code cited anonymous sources who said that Yahoo is looking to launch a YouTube competitor and is also is trying to poach some of YouTube's stars and favorite networks.

Yahoo's strategy is aimed at taking advantage of persistent complaints by video creators and owners who feel they aren't making enough money on YouTube. Industry sources said Yahoo has been approaching individual YouTube stars and some of the big networks on YouTube.

Yahoo executives are telling video makers and owners that Yahoo can offer them better economics compared to YouTube, either by improving ad revenues or by offering guaranteed ad rates for their videos.

Yahoo is also offering extensive marketing, even on its home page, and is allowing video producers the ability to sell advertising along with Yahoo's sales force.

"If Yahoo wants to be at the center of people's entertainment, they need a video service," said Patrick Moorhead, an analyst with Moor Insights & Strategy. "YouTube is a free-for-all video service from cat videos to trailers to real content. Yahoo has a chance to provide less, but better content."

Yahoo CEO Marissa Mayer said she is focusing the company's time and money on search, mail, mobile, social media and video.

There have been previous signs that Yahoo wants to step up its presence in video. In May 2013, reports said that Yahoo was in talks to acquire Hulu, the video site that streams TV shows and movies, for as much as $800 million. The purchase failed since Hulu's owners canceled plans to sell the company.

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