Streaming Media
Vessel
Vessel was ex-Hulu CEO Jason Kilar's "Hulu for YouTube", pay $2.99 a month to watch creators' videos 72 hours before they hit YouTube free. It raised over $130 million on that bet, but not enough people would pay for early access to free content, and Verizon bought it for its tech and shut the service in 2016.
Narrative
The story
The ambition
Vessel was Jason Kilar's second act. Having built Hulu into a business by charging for next-day access to TV, the former Hulu CEO, with former Hulu CTO Richard Tom, set out in 2014 to do the same for the YouTube generation. The pitch was simple: pay $2.99 a month and watch popular creators' new videos 72 hours before they appeared free on YouTube. Creators got a far better deal than YouTube gave them, and Vessel got a subscription business. Kilar's premise, proven once at Hulu, was that people will pay a little to see good video a little early.
The rise
The idea attracted serious money, more than $130 million from Benchmark, Greylock, Bezos Expeditions, and Institutional Venture Partners. After an invite-only beta in January 2015, Vessel launched publicly on 24 March 2015, having signed well over 100 creators. Its offer to them was striking: CPMs around $50 against YouTube's roughly $2.20, plus a bounty per subscriber they converted. On the creator side, Vessel looked genuinely attractive.
The cracks
The consumer side was the problem, and critics named it from the start: why pay $2.99 for something you can simply wait three days to watch free? Early access to otherwise-free content is a weak hook when the wait costs the viewer nothing. Hulu had worked because its content wasn't otherwise freely available online; Vessel's largely was. It never built the paying subscriber base its economics needed.
The collapse
On 26 October 2016 Verizon acquired Vessel, for its technology, product, and team, not its business. The consumer service was sunset five days later, on 31 October 2016. Richard Tom stayed on to fold Vessel's technology into Verizon's online-video ambitions; Jason Kilar left after a transition period.
The aftermath
Vessel's assets went into Verizon's video efforts, including its struggling go90 service, which Verizon itself shut down in 2018. Vessel stands as a well-funded, well-run test of a clean hypothesis, that fans would pay for early access, that returned a clear answer: not enough of them, not for content that was free within days.
The lessons
A paywall needs to sit in front of something people can't easily get for free. Vessel paid creators handsomely and built a polished product, but its core offer, a 72-hour head start on videos that would be free anyway, asked customers to pay for time, not access. Kilar's Hulu instinct was right about early-access value in general and wrong about this case, because Hulu's content wasn't otherwise free and Vessel's was. Test the demand side as hard as the supply side: signing creators is not the same as finding subscribers.
Causal timeline
Failure Anatomy
- 2014-12
- 2015-03
Public launch
After a January 2015 invite beta, Vessel launched publicly on 24 March 2015 with well over 100 signed creators and ~$50 CPMs plus per-subscriber bounties for them. [3]
- 2015
The demand problem
Critics questioned why anyone would pay $2.99 for a 72-hour head start on content that would soon be free on YouTube; Vessel never built the paying base it needed. [4]
No real demandStronger competitor - 2016-10
Verizon acquisition and shutdown
On 26 October 2016 Verizon acquired Vessel for its technology and team; the consumer service was sunset on 31 October 2016. Kilar left; Tom stayed. [5]
No real demand
Structured analysis
What Went Wrong
Root causes
Paying for free content, early. Vessel asked viewers to pay $2.99/month for 72-hour early access to videos that would soon be free on YouTube, a weak hook that never converted enough paying subscribers. [2] [4]
A free incumbent. The content Vessel gated was largely available free on YouTube within days, so YouTube's free model undercut the reason to subscribe. [4]
Contributing factors
Rich creator payouts, thin subscriber base. Vessel offered creators ~$50 CPMs and per-subscriber bounties, but without a large paying audience those economics could not be sustained. [2] [3]
Immediate trigger
Acquired for tech, service sunset. On 26 October 2016 Verizon acquired Vessel for its technology and team and sunset the consumer service on 31 October 2016, after it failed to build a paying subscriber base. [5]
Visible symptoms
Subscriber growth never materialized. Despite a strong creator roster and heavy funding, Vessel did not attract the paying subscribers its model required. [5]
Warning signs
The "why pay?" question, unanswered. From launch, observers questioned why users would pay $2.99 for a 72-hour head start on content that would be free on YouTube. [4]
Affected groups
Evidence
Claims & sources
Every numbered marker in the analysis links to the claim it rests on, and each claim to its sources.
- [1]
Vessel was a subscription video service founded by ex-Hulu CEO Jason Kilar and ex-Hulu CTO Richard Tom, unveiled in December 2014 and launched publicly in March 2015.
- [2]
Vessel charged $2.99 a month for 72-hour early access to popular creators' videos that would otherwise be free on YouTube, and paid creators far more than YouTube (CPMs around $50 versus roughly $2.20, plus per-subscriber bounties).
- [3]
Vessel raised more than $130 million from Benchmark, Greylock, Bezos Expeditions, and Institutional Venture Partners.
- [4]
From the outset, observers doubted enough consumers would pay $2.99 a month for a 72-hour head start on content that would soon be free on YouTube, and Vessel never built the paying subscriber base its model needed.
- [5]
Verizon acquired Vessel on 26 October 2016 for its technology and team and sunset the consumer service on 31 October 2016; Richard Tom stayed at Verizon while Jason Kilar left.
Sources
Vessel (website) (Wikipedia)
Wikipedia
With Vessel, Jason Kilar Hopes To Create A Hulu For The YouTube Generation
TechCrunch · 2014-12-17
Former Hulu CEO Jason Kilar's Vessel Launches To The Public
TechCrunch · 2015-03-24
Verizon acquires subscription video service Vessel, will shut it down on Oct. 31
TechCrunch · 2016-10-26