In April of 2013 Jason Kilar departed Hulu, which he had overseen as CEO since its inception, and rented out an office space in Santa Monica. He bought some white boards, and along with Rich Tom, who’d been his CTO at Hulu, he began “filling them up with a whole bunch of things that we thought were still unsolved, and that we thought tech could help with,” Kilar said one recent morning, sitting in a suite at the Standard Hotel in West Hollywood. Kilar had just flown in from JFK, where he’d been delayed on the runway because of wind conditions, yet he looked characteristically energized and youthful in a checkered button-down and blue chinos.
Two years later, the solution to the problem that Kilar and Tom settled on as the one they wanted to tackle is ready to launch, after several weeks in private beta mode–called Vessel, it’s a curated, online video platform where people can subscribe to their favorite web stars for $2.99 a month and get early access to the stars’ content. So if you’re a big fan of YouTube celebs Shane Dawson, you can subscribe to Vessel and see Dawson’s stuff three days before it’s posted on YouTube and other sites. There’s also a free version of Vessel that anyone can access, although those videos aren’t exclusive.
Unlike YouTube, not just anyone can post their videos to Vessel–you have to be accepted, based on how regularly you post videos and how big your fan base is–giving Vessel a Best Of feeling that differentiates it from most online video platforms. In other words, if you’re looking for videos of cats on skateboards, look elsewhere. This curated approach not only makes the site feel more polished and professional, it’s excited Madison Avenue. Kilar says that over 30 top tier advertisers have signed on, including McDonald’s and Unilever, and that they’re paying CPMs as high as $50–an unusually high number in web advertising.
Ever since Kilar started quietly building Vessel, there have been reports about what he’s been up to–it’s hard to keep a secret when you’re meeting with dozens and dozens of potential content partners. Not to mention that Kilar, who first made his mark at Amazon as a Jeff Bezos protege (Bezos is a Vessel investor), is a high-profile tech figure whom the industry likes to keep an eye on. But this is the first time he’s openly discussed just what he’s trying to accomplish with Vessel, which he refers to as “The Web’s First Window.” Beyond taking on YouTube–Vessel pointedly offers its creators a more lucrative deal split than YouTube does, giving them 70% of advertising revenues and 60% of subscription dollars–Kilar is taking what he learned at Hulu, where he sat at the often contentious vortex of traditional and new media, and applying it to a venture that does not have the same constraints. (Hulu is owned by Comcast/NBC Universal, News Corp. and Disney, which supplies most of Hulu’s content.)
So, for instance, Kilar and Tom were able to “reimagine advertising,” on Vessel, creating fleeting, pain-free, 5-second pre-roll ads that no media conglomerate–which depends mightily on revenues from 30-second ads–would have ever approved. They also came up with a motion poster display ad, which Kilar refers to as “a magazine ad on steroids.” The one I viewed showed an enormous bag of Lay’s Potato Chips with little chips floating above it–as far as potato chip visuals go, I have to say it had a certain elegance.
The way that Vessel most veers away from Hulu is in the type of content Kilar is interested in. He proudly says, “We’re in the everything else business,” meaning everything other than 30-minute TV shows and 2-hour movies. Rather, Vessel is all about short-form web content that’s best viewed on mobile phones and tablets. Kilar calls “the device in your pocket” the one that “matters most.” To this end Vessel is available on all desktops and iOS devices, with a plan to eventually roll out on Android, gaming consoles and other platforms.
Kilar uses the word “cinematic” to describe the potato chip ad. It’s a word he uses a lot, most especially when he’s showing off the pages of Vessel’s 160 creators (130 of them require a subscription), who include everyone from Dawson to Tastemade to Taylor Swift (Vessel has a deal with the major music labels) to Alec Baldwin’s Love Ride series, in which the 30 Rock star jumps into cabs with unsuspecting passengers and gives them relationship advice. On the free service, you can also see episodes of The Tonight Show Starring Jimmy Fallon a day after the show airs, as well as NBA game recaps. And Vessel just made a deal with Discovery Digital Networks, home of web pioneer Phil DeFranco, whose web show The Vloggity will debut first on Vessel. (In a sign of how some creators will likely use Vessel to have it both ways, The Phil DeFranco Show will go up on Vessel the same day it goes up on YouTube and Discovery).
Vessel’s pages are, indeed, cinematic and reminiscent of Hulu’s clean, content-showcasing user experience. But more significantly, “cinematic” is a term that suggests what is at the core of Vessel, which is: training people to think about web video the same way they think about TV shows and movies. In other words, that it’s not only worth it, it’s no big deal, to cough up a couple bucks to see stuff as soon as it’s available.
As Kilar says: “The big insight to this business model is: early access is valuable. There is a subset of the world that really cares, that are fans of Cinderella and they see a $10 movie ticket as absolutely fair and good value in return for the experience they’re going to get. That’s something we paid a lot of attention to when we were thinking about Vessel.”
Whether that will work, of course, is the big question. It’s the eternal genie-out-of-the-bottle conundrum that every profit-seeking organization on the Internet faces: how do you indoctrinate people to pay for what they’ve been getting so long for free? And what is that sweet spot “window” for early viewing? It’s not that painful, after all, to have to wait three days to see videos for free, as opposed to the months you have to wait until Cinderella shows up on iTunes. On the other hand, $2.99 isn’t that painful of a price, particularly for super fans.
In the end, the key to Vessel’s success may have nothing to do with windowing, but virtual exclusivity, which is the case with Love Ride. Aside from two promo videos on YouTube and the Above Average (the online video branch of Saturday Night Live creator Lorne Michaels’ production company) website, there is simply no other place on the Internet to watch the series, at least for the first year–after which, they’ll be available on YouTube and elsewhere. Although Vessel didn’t produce the show, the strategy is similar to the original programming plays at places like Netflix and, yep, Hulu, which rely on their you-can-only-watch-them-here shows to draw eyeballs. Kilar says the Love Ride deal came about from his history with Baldwin, who did a memorable Super Bowl spot for Hulu. “There’s a little bit of shorthand there, which is nice,” he says.
If Kilar can find this shorthand with other big name draws and snag exclusive rights that go beyond 72 hours, he may just have found a way to wiggle on to your laptop.