The Relentless Rise of YouTube

Monday unfurled the latest chapter in the YouTube Journey. At the Q2 earnings announcement for Alphabet, Google CEO Sundar Pichai revealed that Alphabet’s growth in revenues in Q2 2016 was largely due to the increased performance of its YouTube division. Although not specifically broken out in the Q2 10 k filing  YouTube and mobile search were  both identified  by Pichai as accounting for the growth in advertising revenues from the Google Properties Division  which includes Google.com, the Google app, YouTube, Gmail, Google Map and Google Play. An additional $1.02 billion revenue was generated quarter on quarter with  total Google Properties revenue at $18.4 billion, representing a 5.9% increase over the previous 3 months.

On the earnings call, Pichai stated, “YouTube is scaling really well globally...like search” He also provided context around YouTube’s growth in emerging markets and the increasing  growth of YouTube consumption on  “large screens” ie smart TVs, which MIDiA Research’s latest consumer data now has at a 37% global penetration rate.

This latest financial news comes on the back of YouTube’s CEO Susan Wojcicki revealing in June at VidCon that YouTube now had 1.5 billion monthly logged in users. The emphasis here is on logged in users - Monthly Active Users  are therefore going to be considerably higher than this. Either way, it is 50% above the last publicly released number by YouTube when they revealed in March 2013 that they had 1 billion unique users per month - again the emphasis is on the unique users. YouTube has a deliberate policy of being coy about engagement and like all good tech companies, conflates differing sets of numbers  to produce metrics which cannot be used in like-for-like comparisons. Either way, the trend is for growth and YouTube’s growth remains significant.

YouTube’s Top 100 Channels Have Experienced A 30% Growth In Views Over The Previous Two Quarters 

In the last 6 months there has been 30% rise in views on across the top 100 most viewed YouTube channels to 794 billion cumulative views. Clearly, YouTube is seeing a sustained rise in demand from digital audiences who have become used to seeing YouTube as the world’s default video streaming platform. This organic growth is based on the back of 12 years of brand equity development and the ability of the platform to leverage various emerging consumption trends on the platform to fuel underlying growth in engagement.

Although Google (and ultimately the parent company Alphabet)  have had a deliberate strategy of underplaying the ever increasing  role of YouTube in digital consumer’s lives, the reality backed up  by Monday’s financial data is that YouTube is growing from strength to strength.  Additionally as, Pichai referenced in the earning’s call, much of the additional growth is coming from emerging markets which are seeing a sustained rise in disposable income and appetite for entertainment and video consumption in general.

If the first decade of YouTube’s story was about disruption and brand recognition, then the second decade is poised to be about YouTube becoming a dominant video distributor across multiple markets, with a portfolio of differing content and service offerings.