YouTube Has Benefited From Increased Competition
- Ver Original
- Outubro 17º, 2015
Americans are streaming almost four times as much digital video today as they did in 2011. A lot of that is thanks to the growing number of options available for streaming. Netflix (NASDAQ:NFLX) has come into its own with a broader library and original content. Facebook (NASDAQ:FB) has pushed digital video into its 1.5 billion users’ News Feeds. Even cable and telecom companies like Verizon (NYSE:VZ) are getting into streaming video.
With all of the new competition cropping up — particularly in the past year — investors might think one of the longtime players in the space, Alphabet‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube, would feel the pressure. But YouTube’s chief business officer, Robert Kyncl, told The Wrap recently that the added competition has actually helped make streaming video more accessible to the mainstream public. As a result, YouTube is benefiting from the additional competition.
A rising tide lifts all boats
There’s no shortage of options available to stream video content. Just about any website you visit probably has some video content embedded on some of its pages. You can’t open Facebook, the most popular app in the world, without being bombarded by video clips. We have our smartphones on us at all times. And an entire industry has cropped up around making it easier to watch streaming video on the screen you’re used to watching video on — the TV.
My point is that we’re never without a screen, and it’s increasingly easy to find and play video content on any of them. That’s great for anyone in the streaming video industry, and it explains why companies such as Verizon have pushed into the space recently.
Verizon just launched its Go90 service, which combines videos native to the Internet, such as its HuffPost Live, and premium content from television networks such as Comedy Central. The service is targeted toward millennials with an emphasis on sharing content over social media — another area where video has grown popular.
Facebook started a big push into video last summer, helped by the Ice Bucket Challenge. Facebook has grown average video views per day from 1 billion to 4 billion since then.
Meanwhile, Netflix has grown its U.S. subscriber base from 36 million to 42 million over the last year. What’s more, the average watch time per Netflix subscriber continues to climb as it adds more original content.
But YouTube hasn’t stopped growing
Meanwhile, YouTube’s growth is accelerating. During the parent company’s second-quarter earnings call, CFO Ruth Porat told investors YouTube watch time had accelerated, growing 60% year over year. Mobile watch time doubled year over year.
Kyncl added in a recent interview that uploads now average 400 hours of video every minute, up from 65 hours of video per minute in 2011. Not only have smartphones made it easier to consume digital video, they’ve made it easier to produce it.
That’s partially what’s driven the growth of video on Facebook, as users produce videos of themselves or what’s going on around them. Many analysts believe the increase in video on Facebook may have a negative impact on YouTube’s viewership, but Kyncl revealed that just 5% of YouTube’s traffic comes from Facebook. Therefore, Facebook replacing more videos with its own won’t have a huge impact on YouTube’s business.
And Kyncl’s not afraid of further growth from competition like Facebook or Verizon or whomever. “We’re playing in such an enormous space — it’s almost $200 billion a year — we can all grow within the next five to 10 years and not grow into each other,” he said. For reference, YouTube reportedly generated just $4 billion in revenue last year.
YouTube isn’t afraid of the competition, but it’s looking to provide one of the best options for streaming video content. That means investing in original productions from talent discovered via YouTube and putting contracts in place to ensure some of its most popular content remains on the platform. YouTube is also planning to launch a subscription option, which could help it finally turn a profit while making its viewers more loyal.
A little competition never hurt anyone.
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Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and Netflix. The Motley Fool recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.