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OTT

OTT

Youtube Red's global expansion will boost revenue, but won't be the next #netflixeverywhere

Via Ovum Media center

May 16, 2018

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16 May 2018: Google’s YouTube Red, the online video platform’s premium ad-free subscription-based offering, is soon heading for global expansion, bringing its global market availability in line with Netflix and Amazon Video. Although YouTube only needs to get a fraction of its global users to pay in order to match, or even exceed, Netflix’s total global subscriber count, doing so will be a major challenge. In Ovum’s view, YouTube Red’s ad-free experience may appeal to “super fans” of the platform’s many creators, who YouTube will now be able to further monetize, but most YouTube users are likely to continue to be happy to put up with a few ads in exchange for free access. Indeed, according to Ovum’s OTT Video Subscription Service Provider Forecast: Americas, standalone YouTube Red subscribers accounted for less than 1% of total YouTube users in the US in 2017, where the service has been available for over two years.

Figure 1: Netflix total paid subscriptions vs. Total Amazon Video (Prime + standalone) subscriptions vs. total logged-in YouTube users, global, 2017

Netflix total paid subscriptions vs. Total Amazon Video (Prime + standalone) subscriptions vs. total logged-in YouTube users, global, 2017

Source: Ovum, YouTube (as of June 2017)

“The expansion of YouTube Red will not cause Netflix or Amazon any cause for concern, as the real impact will be on the music streaming market, not the premium video market. YouTube Red’s value comes into its own when viewed as a music streaming service: subscribers have access Google Play Music, can download videos for offline play, and play sound from music videos in the background on mobile devices. Plus, music videos account for nine of the 10 all-time most-viewed videos on YouTube, demonstrating that it already serves as a music service for many internet users. In other words, rather than positioning a threat to Netflix, the global roll-out of YouTube Red will put pressure on Spotify and Apple Music.” said Matthew Bailey, Analyst in Ovum’s Media & Entertainment team.

“On the surface, YouTube Red’s business model shares similarities with Netflix and Amazon Video, but Google is no match for the big SVODs when it comes to exclusive content. Google has invested in exclusive and original content, but the fact is that most YouTube users simply do not go to YouTube to watch “premium” content. And even if Google continues to up its content game, with investments currently reported to be in the “hundreds of millions”, YouTube is unlikely to directly compete with Netflix and others for the foreseeable future”, said Tony Gunnarsson, Principal Analyst in Ovum’s Media & Entertainment team.

Related Topics
  • Announcement,
  • Media & Entertainment,
  • North America,
  • OTT,
  • Ovum,
  • Tracker

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This content extract was originally sourced from an external website (Ovum Media center) and is the copyright of the external website owner. TelecomTV is not responsible for the content of external websites. Legal Notices

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