Is the biggest Competitor of Netflix Actually YouTube?

YouTube is at least a $15 Billion a year business for Google. Yet it could become much bigger with new plans.

YouTube generated nearly $5 billion in ad revenue in the last three months, Google revealed today as part of parent company Alphabet’s fourth quarter earnings report. That’s impressive but Google could make YouTube a media company much in the way Netflix has become a dominant force in recent years.

In an era of bundled subscriptions where Netflix, Roku and others are rising, Google wants to join the fun. According to the Information, the Google-owned video giant is considering giving people the ability to sign up, through YouTube, for a wide range of subscription-streaming services run by entertainment companies, according to people familiar with the situation.

YouTube the Gatekeeper

YouTube becoming an access point to the new TV Universe makes sense, since this is already a company with Google that dominates search. Google creating a subscription bundle for its platform and integrating TV streaming into it makes a lot of sense.

YouTube has talked with several entertainment companies about adding their services. Google is not too great at innovating beyond its search and Ad business so this all remains to be seen. But honestly, if you aren’t watching Netflix, where are you likely to be? It’s video games and YouTube for a lot of people under the age of 35.

YouTube is looking to take on “a gatekeeper role” like cable operators in the traditional television world. My bet is actually on Roku for leading that role, not Google. YouTube is only a few years too late to this party, but it should try. Better late than never.

Amazon and Apple have already waded into this area with their video subscribers who want to watch a show on HBO. Platforms being gate keepers is nothing new but the future of streaming is the future of TV. YouTube has to keep up if it can.

The move would see the company directly target Apple TV and Amazon Channels by allowing subscribers to sign up for outside streamers. Roku and possibly Amazon though do have a better chance since they have a direct way to attract consumers and the growth in Ad revenue that you’d like to see for that approach to be profitable. YouTube ads are very annoying but not a reason for me to buy YouTube premium. That’s just a deceptive tactic.

Google Home devices are well behind Alexa devices in the smart home in the U.S. Nearly 70% of smart speaker owners use Amazon Alexa devices. YouTube is one of the most engaging things that Google still has left, but it’s by no means ultra compatible with the future of streaming.

Amazon will easily hold onto its top spot through 2021, when nearly 70% of total U.S. smart speaker owners will continue to use an Amazon Echo device. In this time Amazon will continue to take Ad revenue away from Google and Facebook as it grows its reach via a smart home, AI and consumer retail platform approach that Google can’t realistically compete with. Amazon has the eyeballs, the search traffic and the gadgets. YouTube is cute, but it’s not the future of the TV universe.

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