Among the well-known video platform, Google’s Youtube has already become one of the world’s largest online video platforms. It will continue to grow in the way it has in the last several quarters. Soon, this may also match Netflix in terms of revenues by the end of the year.
On Tuesday, in the first-quarter earnings, it is noted that Google parent company Alphabet mentioned Youtube has gaining revenue of around $6.01 billion in advertising revenue at the time of quarter this higher from that of $4 billion from a year ago. However, the growth rate is around 49%. Well, the acceleration is more than 46% growth in Q4. Notably, it is almost twice the growth rate of Netflix which has reported almost 24% revenue growth in Q1 and expected the growth for slowing down to 19% in the next quarter.
Currently, you will find that the growth trajectory continues, Youtube will be booking between $29 billion and $30 billion in revenue this year. Well, Netflix is expected to report $29.7 billion in revenue this year. Now, Netflix is expected to report $29.7 billion in revenue for 2021 as per an average estimate from analysts polled by Refinitiv.
In Feb 2020, Alphabet first broke out Youtube’s advertisement revenue. During this time, the investors have taken a clear look at its growth streak which is bolstered by the pandemic as millions of people sheltered in place and curtailed outside activities. Now, Youtube has become the biggest winner of the pandemic in terms of social sites. The recent Pew report highlights the video platform which saw a usage growth from 73% of U.S. adults in 2019 to almost 81% in this year 2021.
Well, the two services need to have dramatically different business models. Well, Netflix revenue came almost exclusively from its paying subscribers that amounted to more than 207 million at the end of March. Notably, Youtube relies primarily on advertising. Netflix buys content directly and it planned to spend almost $17 billion this year. Now, Youtube has shared a significant portion of its ad revenue with independent creators.
Well, Youtube is the only one that has a fraction that has as many subscribers as Netflix, it got hours on its side.
Now, Youtube users are watching one billion hours of video each day whereas Netflix viewers tune in for only 400 million hours.
To be precise, both Youtube and Netflix are stealing the attention and dollars from the traditional linear TV. On Tuesday, the company said that Youtube’s growth has been well driven by the ‘direct response’ (DR) ads and brand advertising. Well, the direct-response ads elicit a specific action. However, Youtube which has helped in boosting the e-commerce for partners and brand executives mentioned this on Tuesday.
Google’s chief office Philippi Schindler mentioned on Tuesday, the company has been, “offering advertisers efficient reach to large audiences which are incremental to those found on TV.”
Schindler mentioned in the call, “DR was practically non-existent on YouTube a few years ago and it’s now a large and fast-growing business. People want the discovery process to buy a lot easier and I think we’re still scratching the surface with what’s possible with commercial intent on YouTube.”
Now, the advertisers are willing to look beyond television. Youtube is owned by the most sophisticated as well as powerful AI Company. “Linear TV’s future is grim, at best,” Greenfield stated.