The Big Red Machine
It has become clear that YouTube is becoming one of, if not the, most dominant video platform. For a long time, users have been getting used to "lower quality" content coming out of YT, and other platforms. And with Generative AI entering the fold, the gap in quality between studio-level content and UGC is only going to get smaller.
Late last week, YT reported $8b in quarterly ad revenue, which was an increase of 21% YoY. If we were to see similar increases at YT over the rest of 2024, that would take YT from the $31.5B in ad revenue it made in 2023 to $38B by the end of 2024. And that doesn't include the (less profitable) revenues YT makes from its subscription services like YouTube Premium/Music and YouTubeTV.
Netflix made $33B last year.
Of course, NFLX is safe from YouTube's rath, as YT kindly exited the Premium TV realm, where even if users appear to be in less need of studio-quality content, NFLX's $33B in revenues shows, along with declining but huge revenues in the PayTV universe, that there's still demand for the high-end stuff—along with sports.
But other up-and-coming players need to be more worried about YT. Tubi and Pluto have next to no worthwhile moat over YT. And it's not if, but when, YouTube figures out how to conquer the free "TV" world, it's over for them. If you don't believe it, remind yourself of how easily YT came to dominate the podcasts and video game realms, both of which didn't innately start on its platform.
Disney Streaming, while they have the advantage of amazing IP, it'll be interesting to see how that translates 10 years from now after a whole generation of kids have grown up spending more time on YT than any other platform, and as YouTubers get better at building up their own mini-franchises.
I even think Amazon's Prime Video needs to be careful. Sure, they have a massive base with Prime memberships, but as YT has increasingly become the "home" screen for many living rooms, there's next to nothing outside of a few lowly watched originals that you can get on Prime that you can't get on YT and YouTube Primetime—including NFL games.
And if TikTok ends up getting the boot—which despite what many smart people say, I believe is the likely case due to China's pride—who do you think is going to fill that void? It's going to be YouTube Shorts, which is the only short-video platform doling out a cut of the revenue they make.
I say all of this to ask whether the way to play in the video market going forward is to be YouTube first...?
For 2 decades, if you wanted to get into video, launching a cable channel was option #1, #2 and #3. With the invention of streaming, people (including me!) started standing up their own platforms. This has proven hard, and unprofitable. While I still believe niche players, like us at BlackOakTV, still have room to grow, everyone may have to figure out how they tap into YouTube and leverage it for its reach, revenue, and influence.
Design @ Stripe, Ex Heirloom, Lyft, LinkedIn
5moYouTube is ALWAYS on for me. Background podcasts, interviews, whatever...It's great. Premium was the best purchase I made in 2023