For those hoping that the high-pitched, hyperactive “Fred” was just a passing sensation — guess again. The Fred YouTube channel today surpassed 1 million subscribers, the first channel to do so — and he got all of those subscribers in less than a year. (Suck on that, Jonas Brothers! Get your paltry 471,910 subs out of here.)

When asked for comment, Lucas Cruikshank, the Nebraska teen who plays Fred (and was a hit at our NewTeeVee Live Conference last year) sent us the following email:

“I wanna thank everyone who has supported the Fred series. It means a lot when something you created becomes popular. Oh, and Fred? He can’t count that high so he has no comment.”

While that’s a nice enough quote, to get the full effect, you need to watch his 1 million subscriber-mark celebratory video.

From what we can gather, Fred became the No. 1 most-subscribed channel back in October of 2008, passing other YouTube stars like Smosh.

And it’s not just having those subscribers — they keep coming back to watch more. In the last six months, only one video has gotten less than a million plays — the “Fred Thanks You” video released an hour ago. Most are in the 4-6 million plays range. (Note to self: Ask Fred to host a NewTeeVee Video Podcast.)

Movie rental chain Blockbuster’s troubles aren’t over yet. The company painted a grim picture for itself through an SEC filing yesterday, saying it might not be be able to meet lender conditions needed to complete financing deals, throwing its ability to continue as a so-called “going concern” — auditor-speak for staying in business for the foreseeable future — into doubt.

The LA Times writes:

Last week, Blockbuster said its revolving and term loan agreement was amended, giving it a $250-million revolving loan refinancing that matures Sept. 30, 2010. Lenders including JPMorgan Chase & Co. also agreed to waive any default that could result if auditors attached a “going concern” classification.

But lenders weren’t obligated to fund the $250 million credit facility unless Blockbuster met certain conditions. Blockbuster said yesterday that those conditions might not be met, and that even if the loan did get funded, its ability to operate was still in doubt.

The writing’s been on the wall for Blockbuster for some time now. We outlined some of the (many) missteps the company took in a post last month when the company insisted that it was not going bankrupt this year.

SNIKT! The illicit copy of the upcoming summer blockbuster Wolverine, err, clawed (<– sorry!) its way to the top of TorrentFreak’s Most Pirated Movies on BitTorrent. In less than a week, more than 1 million copies of X-Men Origins: Wolverine have already been downloaded. Hopefully the leak won’t hurt ole Wolvie in ticket sales too much, and he’ll fare better than the second-most pirated movie, The Spirit, did at the box office.

While Wolverine tore up the BitTorrent list, over on Trendrr’s Most Twittered Broadcast Shows, status quo was the name of the game. The usual suspects made the top five with American Idol ratcheting up a record number of Tweets. Heroes (how are people still talking about that show?) lost some steam and CSI made its way back into the rankings.

Things have settled a bit for Lost** now that March Madness (and all bracket losses people griped about on Twitter) is almost over. The twisty-time-traveling series just keeps getting better and Lost is slowly getting back to its high Twitter numbers from the season premiere.

NOTE: TorrentFreak data is based on http downloads of .torrent files from various BitTorrent sites. The data is collected by TorrentFreak and is for informational and educational reference only. Currently both DVDrips, DVD Screeners and R5 rips are counted. The “back” designation means that the title was in the list before and has reappeared, possibly in a new format.

** Lost gets separated out because the word “lost” is rather common. Trendrr believes it has stripped out the references to keys and wallets, but we still give the Oceanic Six & Co. their own graph just to be safe.

Netflix officially announced its deal to stream the first nine seasons of South Park on its Watch Instantly service, and it also announced an agreement to stream Nickelodeon shows like SpongeBob Squarepants, Blues Clues and Dora the Explorer as well. The new deals give Netflix 300 episodes of MTVN content.

We know from a New York Times report last month that the South Park guys met with Hulu and Joost as well, but went with Netflix because Netflix made a cash offer. From that New York Times piece:

“There was no talk of ad splits or guarantees or advances, just a payment for a show Netflix seemed really happy to have,” [South Park Co-Creator] Mr. Stone said.

Today’s press announcement did not include terms of the MTVN streaming deal, so we don’t know if a similar cash offer was made for the Nickelodeon content.

It was all quiet on the new content front for most of Netflix’s first quarter. We’re big fans of the service (I streamed a bunch of TV shows through it while sick in bed over the weekend), but while the quality of programming is getting better, it’s still lacking. Hopefully now that Netflix has its hardware figured out, it can get back to signing more deals like this.

Break Media has purchased HBOlab, a.k.a. Runawaybox, Break CEO Keith Richman confirmed to NewTeeVee today. This was a deal we’ve been following for a couple months now, but according to Richman, this morning he is meeting with HBOlab team for the first time as Break employees.

Richman called the deal price “not overly significant.” It includes HBOlab’s existing shows, equipment, and 3-4 employees. HBOlab general manager Fran Shea will not be joining Break. Despite continued investment over the years, HBOlab had languished at HBO, where it was hampered by fear that original web content would dilute the HBO brand (hence the “Runawaybox” moniker).

Meanwhile, Los Angeles-based Break is stepping up its branded content efforts, with at least seven fully sponsored branded series in production now. Though HBOlab hadn’t tackled branded content, those folks do know how to produce web video very well, so they are basically hires for Break’s production team. They will also continue to produce their shows Man in the Box and Elevator as well as sketch comedy bits. Richman did not mention future plans for HBOlabs’ Michael Buckley development deal or the YouTube-stars-as-actors show Hooking Up, though he said all remaining HBOlabs assets had been acquired.

Break, which focuses on web content that appeals to males, has played around with original content for a while now, creating a web show with Endemol and teaming up with the creators of Saw to produce an original online horror film in 2007. Richman said of those projects today, “We bit off more than we could chew at that point in life.” Now, the company feels relatively strongly positioned in the marketplace compared to its web video peers, and is giving original content another go.

Richman said Break is looking to acquire additional startups, but probably not digital studios. “Audience or advertising opportunities” would be more likely, he said.

TV networks seem to have a lot of trouble with web originals. And it’s not necessarily a problem of too little resources; many HBOlab-like projects have seen millions of dollars down the drain. Another HBO-spawned web comedy site — ThisJustIn, a joint venture with AOL — was simply shut down in 2007. It was actually in the same Santa Monica office space as HBOlab. Turner’s SuperDeluxe closed down and NBC shut its DotComedy as well.

A new report by Credit Suisse projects that video-sharing giant YouTube is on track to lose $470 million this year, writes Multichannel News.

Credit Suisse says YouTube will generate $240 million in revenue, but those revenues will be dwarfed by the $711 million in licensing, hardware, marketing and other expenses the site will incur. About half of that expense will go towards bandwidth, which Credit Suisse pegs at $360 million through the following math:

To arrive at the estimated $360 million bandwidth tab for YouTube, the analysts assumed the site will receive 375 million unique visitors in 2009 and that a maximum of 20% of those users are on the site at any given time. Credit Suisse’s analysis then assumed each user downloads a video at 400 kilobits per second, to yield a peak bit run-rate for YouTube of 30 million megabits per second.

Analysts at Credit Suisse came to the rather obvious conclusion that in order to generate more revenue, YouTube must increase the amount of monetizable, premium content (i.e. be more like Hulu). As if on cue, YouTube recently signed a clip distribution deal with Disney and is reportedly in the midst of a drastic redesign of its site that emphasizes premium content over UGC; it’s due to be unveiled April 16.

Credit Suisse’s estimates come on the heels of a report earlier this week from Screen Digest that said YouTube would earn $120 million this year and one from Jefferies & Co. in March that said YouTube would earn $500 million. In its 2008 annual report, Google said it had “yet to realize significant revenue benefits from our acquisitions of dMarc Broadcasting (Audio Ads) and YouTube.”

The Chinese government issued an edict this week that all movies, TV shows and cartoons distributed over the Internet or on mobile must first get approval from censors. The new rules are an expansion of the oversight the The State Administration of Radio Film and Television (SARFT) applies to traditional media, and will impact Chinese web video sites that host content that was not approved to be shown in theaters or on TV but has become popular online.

According to Forbes: “Content involving religion, sex, violence, sensitive political issues, or perceived damage to national image, social harmony or interests — as always — could be banned or edited.” The new SARFT rules will make web distribution of U.S. shows such as Gossip Girl and Prison Break, as well as popular Korean and Taiwan shows, illegal.

The Chinese government clarified its rules governing web video last year, and in keeping with that upbeat tone, Victor Koo, founder of Chinese video site Youku.com, told The Hollywood Reporter that these latest rules, issued on March 30, are more of a “clarification” than something new. During a recent visit to NewTeeVee, Koo indicated to us that the Chinese government was loosening its grip on web video that it might have at one time deemed inappropriate.

The Financial Times notes that included in this round of clarifications is the rule that video sites must target content that “maliciously damages the image of the People’s Liberation Army, the armed police, the police or the judiciary, or which relates to the torturing of prisoners and the questioning and torturing of criminal suspects.” This particular wording follows recent actions by the Chinese government to block access to YouTube after a video was uploaded supposedly showing police brutality in Tibet.

Though I get a wolf-in-sheep’s-clothing kinda feel from it, different cable and media execs talked up the opportunities of online video at The Cable Show in Washington, D.C., yesterday.

Comcast CEO Brian Roberts said that web video could be a friend of the cable industry because it can drive cable’s broadband business and present a new avenue for advertising monetization. Roberts said his company was looking for a way to let consumers watch what they want on the device they want, similar to what it does with its current tiered VOD. Some content is available for free to subscribers, other premium content requires an extra subscription, and some is pay-per-view.

Giving hope that consumers won’t be raked over the coals to pay for access to premium content online, both Time Warner Chairman and CEO Jeff Bewkes and Suddenlink Chairman and CEO Jerry Kent said they believe that making content available to subscribers online wouldn’t require additional fees. “Some think we should charge extra; I’m not sure about that,” Kent said. When asked if he expected additional payments to be a requirement to access his company’s TV Everywhere, Bewkes simply said, “No.”

While I’d like to believe the olive branch these companies are extending to online video is real, as a cable subscriber for the last 15 years who has watched his bill steadily go up, I know that if there’s a way to tack on an extra fee, the cable company will find it.

UPDATE: Looks like Disney CEO Bob Iger is also a friend of online video, so much so that he doesn’t want it to get all mucked up with an overly-complicated authentication system. MediaMemo was at Iger’s Cable Show talk and got quotes:

“The consumer is king, not us, the content provider, and not you, the distributor.” We have to be mindful of that. They’re telling us they love content, they love access and playibility, and they want great navigation. “They view the computer as an entertainment device”

The gods of sports and online video do not want you to get any work done. How else to explain that live coverage of the Masters will be online just days after March Madness concludes?

The famed golf competition is back starting April 9 on CBSSports.com and Masters.com, but will not be a simulcast of the television coverage. Instead there will be live streaming of the “Amen Corner” (holes 11, 12, and 13), the “15 and 16 Live” (holes 15 and 16) as well as the Masters Extra, which will cover the entire course for one hour prior to the televised coverage.

And just as the March Madness On Demand player got a makeover, so too will you be able to watch all the Masters action in a high-quality stream this year.

For golf on the go, there is also a Masters App for the iPhone (free!) that will provide all the same coverage as online plus the Par 3 Contest and player interviews from three locations.

At the risk of sounding like a broken record, YouTube has once again had to pull music videos from a particular region over payment disputes. This time around, the video site has yanked music videos from the major record labels in Germany after negotiations with the country’s biggest royalty collections group, GEMA, fell apart, reports Billboard.

Earlier this month, YouTube blocked access to music videos in the UK after a spat with its royalty group, the Performing Rights Society. Why all the fighting? Money, of course. YouTube blamed the breakdown with the PRS partially on “prohibitive licensing” and according to CNET, GEMA is asking for royalty rates 50 times higher than what the PRS was asking.

Given all the distress music has caused YouTube recently, we checked in with the company today for an update on its music relationships. A YouTube rep told us that the site has agreements with Sony Music Group, Universal Music Group and EMI; Warner Music is still gone, and no videos have been pulled from any other country beyond the UK and Germany.

Music generates big plays for the video sharing site, 12 of the 20 most-viewed videos of all time on YouTube are music videos. Now where will Germans go for their David Hasselhoff fix?

UPDATE: We spoke with Veoh for official comment on this morning’s news:

• 25 people are being laid off. That leaves the company with 45 employees.
• Veoh founder (and original CEO) Dmitry Shapiro is taking over as CEO and Steve Mitgang is no longer with the company.
• Veoh is focusing its efforts on the Video Compass, which the company says is getting 25,000 new users a day. Veoh plans to monetize the add-on through advertising, though no other specifics were provided on exactly how that will work.
• Veoh.com will still be supported. Shapiro said Veoh.com generates “millions” in revenue each quarter.

Shapiro wouldn’t provide any financial information and would not speak as to how far its last round of funding will take the company. Original post follows.

We’ve confirmed a VentureBeat report of major layoffs at Veoh. According to our source, more than 40 people, close to half of the company, are being let go today, (see update) including some of the management.

Veoh will apparently be refocusing on products like its new Compass toolbar — a video search and discovery product which we called “the opposite of a video portal” when it came out. Compass is cool (I still have it installed — a rarity!) but it’s hardly enough to build a company around yet. The add-on was only listed on Mozilla less than a month ago; Veoh was founded in 2004.

Veoh laid off 20 percent of its then-110 employees last November. It also shuttered a Russian office and let go of its 15-18 employees in October. Perhaps the first outward sign of trouble was when the company blocked some international access to its site last June because it could not recoup bandwidth expenses in less popular regions.

But it’s not like Veoh was petering away slowly. The company has had more resources and strategic relationships than most startups could ever dream of. Also last June, Veoh raised $30 million from Intel and Adobe. That brought its total investment to $69.5 million from those two companies, along with Shelter Capital, Spark Capital, Goldman Sachs, Michael Eisner’s Tornante Company, Time Warner Investments, Jonathan Dolgen and Gordon Crawford.

We’ve been in contact with spokespeople at Veoh and expect to speak with the company shortly for official comment.

I don’t watch American Idol, so I’m not sure if there was some big scandalous upset last week, but something on the talent competition had the Twitterati rushing to cram urgent thoughts into 140 characters or less, giving the show its biggest tweet count on Trendrr’s list of Top Twittered Broadcast Shows since this season started. Heroes had its highest showing since February, while “March Madness” cooled.

Jim Carrey showed he can still open a film… on TorrentFreak’s list of the Most Pirated Movies on BitTorrent, as Yes Man came in at No. 1, bumping adorable dog story Marley and Me down to No. 4. Tony Jaa kicked his way onto the list in Ong-Bak 2, and the animated mouse Despereaux squeaked his way into the top 10.

NOTE: TorrentFreak data is based on http downloads of .torrent files from various BitTorrent sites. The data is collected by TorrentFreak and is for informational and educational reference only. Currently both DVDrips, DVD Screeners and R5 rips are counted. The “back” designation means that the title was in the list before and has reappeared, possibly in a new format.

As we touched on this morning, YouTube is prepping a redesign of its site to separate premium content from UGC. YouTube needs to make money, but will its latest moves to embrace Hollywood kill the community that turned the site into the online video behemoth it is today?

ClickZ broke the redesign story and writes:

The new design will offer four tabs: Movies, Music, Shows, and Videos. The first three tabs will display premium shows, clips, and movies from Google’s network and studio partners, all of which will be monetized with in-stream advertising. Meanwhile the Videos channel will house amateur and semi-pro content of the sort major brand advertisers have shied away from.

If ClickZ is correct, this redesign looks like it will ghettoize the amateur community. On YouTube, promotion drives plays, and there are only so many videos it can feature. The first casualty will most likely be YouTube’s own homegrown stars. How will Fred, Michael Buckley and SXEPhil fit into a new ecosystem populated by the likes of Brad Pitt and Will Smith? YouTubers might be able to coast on their existing fame for a bit, but the next generation of web celeb hopefuls won’t be as lucky. Promotion drives plays on YouTube and the lack of it could mean people who make a living off YouTube will need to go back to their day job (or back to school).

YouTube has been inching toward becoming a premium content destination for a while now. It signed traditional media players such as CBS and MGM, it altered its rules to tame some of the naughtier content and design tweaks like ordered playlists have made the site more premium content friendly.

How will YouTube draw a distinction between premium and UGC content? Right now, the site has sidestepped drawing a line between them and happily mixed the UGC with the premium creating a mish-mash of content. But what becomes of someone like Nalts, who is a partner but infinitely more grassroots than anything Disney will put on the site? Creating lines in the sand like that could get messy.

That messiness could have implications on the very nature of YouTube. The site was built by a community of people who uploaded, shared and commented on one another’s videos. Will the “you” in YouTube move from center stage to understudy? Will YouTube become just another HuluTube to watch TV and movie clips?

We won’t know what role UGC’ers will have in the new YouTube until the redesign rolls out (supposedly on April 16). The shift to premium content could actually be a boon for the community as YouTube could finally turn into a profitable long-term venture. But will that community be on the outside, looking in, once again playing second fiddle to the traditional media companies?

What do you think will happen to YouTube’s community? Do you care? Are you a YouTuber who hates or embraces change? Tell us in the comments.

Disney is finalizing talks to put clips from its properties like ESPN and ABC on YouTube, according to paidContent. But if that wasn’t enough to stir the online video pot, Disney is evidently also in discussions to put full episodes of its content on YouTube in an arrangement that would preclude a similar deal between Disney and Hulu.

The Disney/YouTube clip deal would have content embedded on YouTube’s site using ESPN and Disney video players — not YouTube’s player (similar to what CBS is doing with March Madness). Disney would control the ad inventory, but YouTube woud get some of that to sell on its own. The Disney/YouTube full-episode arrangement would be a pay-for-play deal that would give Disney an immediate payment for having its content run on the site.

Speaking of which, paidContent also picked up a few more nuggets on the Disney/Hulu deal. Disney would be an equal partner with News Corp. and NBC, with each having a 30 percent stake in the company, and Disney would commit to marketing the service.

For its part, YouTube is reportedly prepping a new redesign to welcome Disney and other big name content partners. The next iteration of the video site would separate out the premium content wheat from the UGC chaff, something the site needs to do if it wants to create an advertiser-friendly environment.

Though YouTube is the 800 lb. gorilla in the online video world, Hulu is able to monetize more of its content and is growing quickly. This swift kick in the pants is putting the heat on YouTube, which has struggled to effectively earn revenue off its massive audience. Last week Google announced that it was streamlining its Google TV Ads and YouTube ad sales efforts in an attempt to lure in bigger advertisers. Creating a premium content channel would be a step in the right direction to allay advertiser fears of having their brands associated with some of the less desirable content that can be found on YouTube.

And it looks like Disney isn’t the only big name YouTube is in talks with for this premium content channel. The New York Times reported yesterday that Time Warner has approached YouTube about distributing episodes from the likes of TBS and TNT. YouTube already carries content from CBS, Lionsgate and MGM.

Looking to nab bigger advertisers, Google is working to connect its TV Ads business with YouTube and other video sites, The Wall Street Journal reports today.

Dubbed Google TV Ads Online, Google hopes that by streamlining the process of advertising across television and online video, marketers will be enticed to spend more money with the company in this down economy. The service is being tested right now and is expected to launch in the coming months.

The ad buying process isn’t the only thing Google is trying to streamline. The company announced yesterday that it would be laying off 200 people in sales and marketing.

Google has yet to translate the success it found in advertising online into other media. The company shuttered its print and radio ad programs, and while its TV Ads has scored some small victories with Hallmark, Bloomberg, and NBC cable channels, it has yet to gain widespread adoption.

YouTube hasn’t fared too well on the ad front either, hampered by content with which many advertisers don’t want to be associated. The Journal points out that in order for this to work, YouTube needs to get more longer-form content, during which audiences are more tolerant of commercials. YouTube was on a bit of a premium content tear last year, but efforts in that arena have since petered out.

If Google wants to be a player in the TV ad space, it’s got to act quickly. Canoe Ventures, a joint project of the cable companies to deliver targeted advertising, is making product announcements in the next 5-6 weeks. And as cable companies like Comcast, which is a Canoe backer, move more into online video, there’s no reason to think Canoe wouldn’t connect those dots as well.

Two headlines from this week sum up the state of the online video/TV world nicely: “Free Online TV a Threat to Industry,” proclaimed one. “Death Greatly Exaggerated: TV Key To Media’s Future,” countered the other.

The first is from a Variety article recapping the view, espoused by TV industry types at Screen Digest’s PEVE Digital Entertainment Conference, that more viewers will move from broadcast and cable TV to ad-supported online video. But not everyone shares this doom-and-gloom about traditional TV. MediaPost, author of the second headline, recapped a panel at Online Media, Marketing and Advertising’s Global Hollywood Conference, “How Online Is Reshaping The TV Advertising Marketplace (and Vice Versa).” Speakers at this conference said they believe that traditional TV will continue to play a huge role in how we consume video, pointing to a recent Nielsen study that showed TV watching was at an all-time high.

So which is it? What does the future hold for traditional TV and online video?

Unfortunately, the data points in many directions at once. The Nielsen study referenced above also shows that more people are watching video on the Internet, as well. And in a recent survey of its users, NBC found that not only were more full episodes watched online at its site year over year, but users were also setting up computers in the living room and “co-viewing” online video with other people. Not to mention the impressive growth curve that premium content site Hulu is experiencing.

Perhaps looking to burst a few web video bubbles, though, the Telco 2.0 Initiative put out a press release on March 24 with the attention-grabbing headline, “Online video not commercially viable, new report says.”

Even though it predicts the market for online video (including both services like YouTube and IPTV) will reach $28 billion in 2013, Telco 2.0 says that forecast is less than 10 percent of revenue earned by traditional TV and movies. The research firm envisions three potential scenarios for online video. The entrenched players traditional video reassert themselves online (a la Comcast and Time Warner’s authentication plans); piracy destroys the value of copyrighted content; or telcos and Internet service providers (ISPs) move from their current passive role to one in which they become more like FedEx, offering different distribution tiers.

But this whole online video vs. TV debate is fast-becoming antiquated, as the lines between traditional TV and online video continue to blur. Just about every network TV show can now be watched online. YouTube and other web video can now be accessed through TiVo and other set-top boxes. And televisions are increasingly plugging directly into the Internet to access new forms of content and interactivity.

The industry is going through growing pains right now, and no one is sure where it will settle out. At the end of the day, the audience just wants to watch something that entertains; those who create entertaining content will want it on as many screens as possible, and those who own the entertaining content will make sure they get paid for it.

This article also appeared on BusinessWeek.com.