YouTube ditches creators, targets TV users and reaches 25% of the world

YouTube ditches creators, targets TV users and reaches a quarter of the world

At its annual Brandcast event last week, YouTube said more than 1.8 billion users – almost 25% of the world’s 7.6 billion population – log into the streaming platform each month. It represents a 20% increase from the year before and a substantial increase from its total in 2013, of 1 billion.

Alphabet – which owns Google, YouTube’s parent – earned more than $95 billion in advertising revenue last year. Estimates put the total amount of online ad revenue at around $300 billion. EMarketer estimates that around 11% of this revenue comes from YouTube. If true, this would make YouTube one of the largest advertising platforms in the world.

YouTube targets TV users

Brandcast did more than demonstrate the immense influence and scale of YouTube; it also showed a change of strategy. The company announced, “over 150 million hours of YouTube watch time was recorded per day on TV screens alone.”

“The YouTube content is actually scaling for TV incredibly well,” said YouTube Chief Business Officer Robert Kyncl. “It is our fastest growing screen of all screens.”

The company will add TV screens to the list of devices that advertisers can target through AdWords and DoubleClick Bid Manager. For brands chasing cord-cutters, the company is introducing a new audience segment called “light TV viewers.” Targeting the new segment will allow advertisers to reach YouTube viewers who watch most of their videos on the television.

Companies can now buy TV inventory through the Google Preferred ad program. vMVPD users subscribers Q4 2017Google is adding the TV network ad inventory it gets through YouTube TV to the program. The move will allow brands to target audiences watching the most popular YouTube content and traditional TV shows in a single campaign.

YouTube touted its new vMVPD service, YouTube TV, as momentous. Though it hasn’t revealed monthly subscribers, it said the service is now available in more than 85% of US households. It is also the largest vMVPD service available. According to data from TiVo, 9% of consumers used the service in Q4 2017, more than double its biggest rival.

However, television wasn’t the only strategic change targeted by the platform.

YouTube ditches its creators for celebs

It’s no secret that YouTube enjoys massive popularity with the young Gen Z demographic. These children and young adults idolize internet sensations such as Logan Paul, Pewdiepie, and Liza Koshy. However, during Brandcast these stars were nowhere to be found. There was, however, no shortage of familiar faces.

Will Smith, Priyanka Chopra, Kevin Hart, and Demi Lovato were just some of the stars at the event as YouTube looked to “shine a light on human stories that inspire us.” The top Hollywood talent took center stage, while it was tough to find a single YouTube creator in the mix. YouTube announced new videos and partnerships with these celebrities. For example, Will Smith will bungee jump from a helicopter, and Demi Lovato will star in a show to build awareness, both efforts to help highlight the inspiring stories campaign.

read more here: nscreenmedia.com

YouTube TV, Is There a Path to Profit?

Like other virtual MVPDs, YouTube TV is a money-loser.

That’s the bad news. “Even worse, there doesn’t seem to be an obvious path to not losing money,” Bernstein analyst Todd Juenger explained in a Weekend Media Blast analysis on YouTube TV issued Friday. “The financial model doesn’t scale.”

YouTube TV doesn’t break down its financials publicly, but Juenger estimates that YouTube TV is losing about $5 per month per sub, but readily admits that the toughest assumption in making that calculation is the CPM on the product. Given the current, relatively small size of YouTube TV’s sub base, that’s not a material number for a deep-pocketed company like Google and its parent, Alphabet.

Even at 1 million subs, YouTube TV, which is also exposed to annual price inflators from programmers, would lose $60 million per year. “Not even a rounding error for Alphabet,” Juenger noted. “No analyst would even bother modelling it.”

But what if the losses grow to $10 per sub and YouTube TV pulls in 5 million subs. “Now we have a loss of — $600mm OI. Material yet? How about 10mm subs, now we exceed -$1bn in OI losses. Surely, what would catch investors’ attention.”

With that as the backdrop, it’s clear that YouTube TV’s financial overhang is greater the more successful it becomes from a subscriber basis.

“Google knows this. So what is their plan?” Juenger asks, holding that he doesn’t believe it’s their intention to lose money on every YouTube TV sub indefinitely.

Google hasn’t provided those details, but Juenger speculates on a handful of items – some more disruptive than others — that could be part its plot to improve the business as it moved further down the road:

1. Google believes consumers will “fall in love with the product,” giving it the green light to eventually raise the price enough to generate a profit. Notably, it already has raised the baseline price of YouTube TV following the recent addition of networks from Turner. But raising prices will be difficult, Juenger said, because of video competition and “reference points” from SVODs such as Netflix and Amazon.

2. Google believes its ad model will prove so superior, they will generate CPMs will in excess of what Bernstein has modeled, and spread across Google’s video inventory in a way that helps put YouTube TV in the black.

3. Google believes their advertising model will prove so superior, TV networks will turn over national inventory for Google to sell. But Juenger says it’s unlikely that networks will cede the rights to any of their premium inventory (or semi-premium or dubiously-premium inventory) to a third party.

4. Google believes they will gain enough subs and importance in the marketplace to push back on TV network price demand, and possibly drop overpriced or unwanted networks. Juenger points that that this one is probably folly, as no MVPD, virtual or otherwise, has been able to pull this off.

read more here: multichannel.com

YouTube Ads Aim at Cord Cutters

YouTube wants to siphon off more advertising dollars out of the traditional TV ecosystem.

Google’s video platform is promising Madison Avenue new ways to reach people watching YouTube on TV screens — as well as target YouTube ads to cord-cutters and consumers who don’t watch a lot of traditional TV.

YouTube says connected TVs represent its fastest-growing device category, thanks in part to the growth of YouTube TV, its over-the-top “skinny bundle” pay-TV service launched last year.

While overall mobile accounts for over half of all YouTube videos viewed, users now watch more than 150 million hours daily of YouTube on television screens worldwide. That’s up 50% from 100 million hours per day in the past six months. (One year ago, total viewing on YouTube was around 1 billion hours per day; Google declined to provide an updated figure.)

“We are seeing more YouTube being watched on TV screens, and more TV content being watched on YouTube — it’s the ultimate convergence of video,” said Debbie Weinstein, managing director, YouTube/video global solutions at Google. “Advertisers are saying, ‘What are you building for me to reach YouTube viewers on TV?’”

Here are the three ad programs YouTube is rolling out:

“Light TV viewers” targeting:

In the next few months, YouTube will introduce a new audience segment in AdWords called “light TV viewers.” These are consumers who, based on Google and YouTube’s metrics, watch most of their TV and video content online — and are much less likely to subscribe to pay TV.

YouTube on TV screens:

For the first time, advertisers will be able to reach audiences specifically on television screens through AdWords and DoubleClick Bid Manager. That option will join the existing ability to target YouTube viewers on smartphones, tablets, and desktops.

YouTube TV ad inventory will be available through Google Preferred: So far, Google hasn’t sold ads for its OTT “virtual pay-TV” service. Starting in the fourth quarter of 2018, inventory on some U.S. cable networks on YouTube TV will be available as an extension to Google Preferred, the premium ad program for the top 5% most popular YouTube channels.

The “light TV viewers” targeting — which will span ads across all device platforms — is particularly interesting to advertisers who are trying to reach audiences that have become very hard to find on conventional TV, Weinstein said. More than 50% of U.S. consumers aged 18-49 in U.S. are “light” TV viewers (in the bottom one-third of the total TV audience based on minutes viewed), according to Nielsen. However, 90% of that group watches YouTube videos, according to Weinstein.

Meanwhile, Google is looking to dial up the ad monetization on YouTube TV. First launched in April 2017, YouTube TV is now available in 99 of 100 top U.S. designated market areas, reaching some 85% of the nation’s TV households. As you’d expect, most viewing of YouTube TV is on TV, with television screens accounting for more than 70% of the total watch-time.

Starting later this year, YouTube TV ad inventory will be added to Google Preferred. Weinstein noted that YouTube TV ads bought through Google Preferred will be dynamically inserted, letting advertisers target ads based on demographic profiles rather than just showing everyone the same ad as with the majority of traditional TV buys.

This January, YouTube said all videos in Google Preferred will be reviewed by human moderators before they’re eligible for monetization. That came after a series of “brand safety” blowups in the past year, when advertisers discovered spots unexpectedly running against hate speech and other content they didn’t want to be associated with.

read more here: variety.com

YouTube TV seeks Digital Publishers

YouTube’s $40-a-month live TV streaming service, YouTube TV, reportedly wants to add channels from digital-native publishers like Cheddar, Tastemade, and The Young Turks (TYT) Network to its package of network offerings, Digiday reports. The skinny bundle service is now testing up to six new channels from such publishers.

YouTube deployed the service last year amid a wave of launches of similar services, known as vMVPDs (or virtual multichannel video programming distributor) or “skinny bundles,” that offer a smaller package of networks than the traditional pay-TV bundle, for less money.

Adding popular digital-native publishers to its package could give YouTube TV greater cachet and potential uptake among young viewers, while further legitimizing these publishers by opening them up to broader, more linear-based viewership — and bigger advertisers — as vMVPD subscribers more often watch through connected devices on TV screens.

By adding live streams from digital-native publishers, YouTube TV could differentiate its service in a way that rivals haven’t. Despite the many skinny bundles out there, none are markedly different from the others. Moreover, vMVPDs are arguably not only offering nearly identical services among themselves, but they are also practically identical to the traditional bundle, aside from being cheaper and delivered over-the-top (OTT). YouTube TV could therefore stand to gain subscribers, particularly millennials, who are likely to be more familiar with digital-first publishers and to want their video product as a viewing option.

Meanwhile, digital publishers are seeking revenue diversification, as Facebook proves to be an increasingly unreliable partner, as Adweek recently reported.Earlier this year, Facebook de-prioritized publisher content in News Feed, which has long driven significant traffic to publishers’ sites. Additionally, publishers that have agreed to produce content for Facebook Watch aren’t relying on those partnership deals — which typically run a year — as a long-term revenue source, per Digiday. This means these publishers are in search of new distributors, which YouTube TV could provide.

Digital publishers may also be enticed by YouTube’s strong reputation as a video destination, as well as its historically consistent monetization model, with 55% of ad revenue going to publishers. vMVPD players have structured deals with networks similarly to traditional ones with cable companies, wherein the distributor pays a carriage fee on a per-subscriber-per-month basis. In the case of these six digital publishers, YouTube isn’t paying a carriage fee yet, but will implement an ad share model, with both YouTube and publishers selling inventory.

YouTube TV rockets to top of vMVPD list in 2017

YouTube has been spending big to promote its vMVPD service. According to the latest data from TiVo, the service was used by 9% of consumers in Q4 2017. That would make it more than twice as big as its biggest rival.

YouTube TV ad blitz working

YouTube TV has been on an ad blitz for the last several months. The service was a very visible sponsor of Baseball’s World Series, spent big on other TV ad campaigns, and is doing more of the same this year. It is also advertising extensively to regular YouTube users. According to TiVo’s new Q4 2017 Video Trends Report data, the marketing spending is paying off.

TiVo added YouTube TV to the quarterly survey for the first time in Q4 2017. An amazing 9% say they use the service. The next nearest service, DirectTV Now, has less than half of YouTube TV’s total, and Sling TV has less than a third. We should perhaps treat the YouTube TV number cautiously. It is possible some survey respondents confused YouTube TV with YouTube on TV. That said, even if YouTube TV has just half the number of users as TiVo indicates, it is still the new category leader.

The TiVo numbers suggest the size of the vMVPD market could be much larger than the 4.5 million estimated. Dish Network reports that Sling TV has 2.2 million subscribers. YouTube TV could already have more than 4 million subscribers, and it could also mean the total number of vMVPD subscribers is almost double the previous estimates.

SVOD continues its inexorable advance

TiVo’s data says that SVOD continues to grow in all dimensions. 68% say they use an SVOD service, up more than 4% over the previous year. Netflix continues to dominate, with 55% saying they use the service. 26% use Amazon Prime Video, 17% use Hulu, and 6% use HBO NOW.

Spending on SVOD services increased strongly. The number of people spending more than $15 a month increased from 27% in Q4 2016 to 35% one year later. However, it could be vMVPDs that are driving this number, rather than people subscribing to multiple SVOD services. Only one vMVPD, Sling TV, has a tier below $21 a month. The rest charge $35 or more per month. The increase in the number of people spending over $21 a month was 9%, with 7% paying over $30.

Time spent with the services also increased. 93% of people that subscribe to SVOD services say they use the service every day, 3% higher than two years ago. As well, the number of people that say they use their service for less than 1 hour a month decreased 10%, to 12%. Meanwhile, those using their service for 2 hours a day or more increased dramatically. A third say they watch their SVOD services for more than 3 hours a day, and almost a half watch from 1 to 3 hours per day.

TVOD continues its slow drift downwards

Transactional VOD continues to struggle in the digital era. The number of people saying they had rented or purchased a movie or show online declined slightly over the last year, to 37%. Amazon maintained and slightly extended its lead, with 18% saying they used Amazon’s video store in Q4 2017. Redbox kiosk users fell slightly to 13%. Apple also lost a little ground to Amazon, with only 8% of saying they used iTunes in Q4. Google Play looks as though it may overhaul iTunes this year. It gained slightly more users and is only a little behind iTunes.

read more here: www.nscreenmedia.com

How long will YouTube TV be priced at a loss?

YouTube TV reaches 50% of US population

YouTube TV announced it has launched in a further 14 markets, adding to the original five markets it previously supported. The new markets are Baltimore; Boston; Cincinnati and Columbus, Ohio; Jacksonville-Brunswick, Fla.; Las Vegas; Louisville; Memphis; Nashville; Pittsburgh; San Antonio; Seattle-Tacoma; Tampa-St. Petersburg-Sarasota; and West Palm Beach-Ft. Pierce, Fla.

The company says it will launch in further 17 markets in the coming weeks. With a total of 36 major metropolitan markets covered, its reach will increase 64% of the population.


New broadcaster affiliate agreements benefit YouTube TV

YouTube TV’s progress is remarkable considering the company promised it would not launch in any market that it could not deliver the top four local broadcast channels. Previously, negotiating the appropriate licenses was a Herculean task.

A licensor would have to go market-by-market negotiating with each independent affiliate separately. Also, it would have to negotiate with big affiliate groups such as Sinclair Broadcasting and Hearst Television. Then it would have to further negotiate with the big four networks to get their owned-and-operated station.

However, YouTube is the beneficiary of a new approach by the broadcasters. ABC, CBS, Fox, and NBC have reached an agreement with many of their affiliates to negotiate a deal on their behalf with licensors such as YouTube TV. Stations can opt-out of these agreements if they like, but looking at YouTube TV’s rapid progress, it appears most are choosing not to.

YouTube TV is certainly making a loss

YouTube TV channel bundle cost
The lowest cost of YouTube TV’s channel bundle
Being able to get the licensing done is one thing, but getting a good deal is quite another. The best license rate that YouTube TV could have expected to get from content providers is what traditional pay TV operators currently pay. Using estimates for those numbers, the 48 channels I receive from YouTube TV in San Francisco Bay Area would cost $34 a month.

However, YouTube is likely paying more than big operators like Comcast. Bob Iger, Disney’s CEO, mentioned that the license fees he sees from vMVPDs like YouTube TV are slightly higher than for regular operators. How much more is anyone’s guess, but even a 5% premium means YouTube is paying more in license fees than it is receiving in subscriptions.

YouTube TV can probably sustain these losses while subscriber numbers remain low. However, if the service takes off, things could get very ugly for the service.

About the estimates

Many of the channel license fees I obtained from SNL Kagan estimates for 2014. I corrected these numbers by applying a 35% increase. ESPN license fees increased from $6.04 in 2014 to $7.86 this year, a 30% increase. Comcast content license fees increased 35% between Q2 2014 and Q2 2016, while Dish’ increased 80%.

I also consulted the site whatyoupayforsports.com for current estimates of the license fees paid for major sports channels. I also used other SNL Kagan estimates for retransmission fees paid to owned-and-operated and affiliates of the major four broadcasters. These numbers gave an average cost for the four broadcasters ABC, CBS, Fox, and NBC.

read more here:

http://www.nscreenmedia.com/youtube-tv-making-loss/

YouTube TV’s DVR Has a Catch

The cloud DVR that comes with YouTube TV’s new OTT TV service comes with unlimited storage, but is apparently limited when it comes to letting subscribers fast-forward through ads in recorded programs.

YouTube confirmed to The Wall Street Journal that subscribers to the new offering, now available in five markets for $35 per month, will be forced to watch commercials in some popular shows recorded to the cloud DVR – a restriction that is not present in traditional local DVRs or cloud DVR offerings from Comcast or Sling TV, the Dish Network-owned virtual MVPD service.

Due to a “tangle of contracts” YouTube has with media giants such as Disney, 21st Century Fox and NBCUniversal, if a new TV episode is available via VOD (which disables fast-forwarding for ads), customers won’t have access to a cloud DVR-recorded version that would support ad-skipping, the paper said, noting that the ad-skipping restriction doesn’t factor in if a VOD version of a show doesn’t exist.

YouTube TV makes no mention of this limitation in its FAQ about its cloud DVR, which reads:
“You can record as many programs as you want at the same time, without ever running out of storage space. We’ll even keep each recording for 9 months. Stream from your library anywhere in the U.S.”
The WSJ said this restriction appears to be a special case in part because some believe YouTube “hasn’t done enough to battle pirated content appearing on its platform.”

YouTube TV also has not detailed the architecture of its cloud DVR, and whether its special rights arrangements with some programmers means it can let multiple subscribers access the same copy for certain programs, or if its system makes individual copies of all program recording requests.

YouTube has been asked for further comment and clarification on this point.
Though it’s extremely inefficient from a storage standpoint, network and cloud-based DVR services from Comcast, Altice (in the former Cablevision System properties) and others make individual copies of all recorded programs to ensure that they stay within the bounds of copyright rules.

read more here:
http://www.multichannel.com/blog/bauminator/youtube-tv-s-cloud-dvr-has-catch/412114

YouTube TV debuts in 5 US markets

YouTube TV is especially interesting for marketers because it’s backed by Google. While Google has the power to potentially turn YouTube TV into a strong competitor given its budget, bent toward innovation and massive technology infrastructure, the company could also demand higher advertising rates as the service picks up traction.

Alphabet, Google’s parent company, has put a sharper focus on YouTube as consumers demand more video content and turn more frequently to their mobile devices to view it. On a recent Alphabet earnings call, analysts suggested that YouTube could act as a sort of heir apparent to Google’s search advertising business, which has been its key revenue driver for years.

However, Google is also currently navigating tough waters with YouTube, as major U.S. brand marketers including Verizon, AT&T and PepsiCo freeze their spend on the platform over issues with ads appearing next to offensive content, including terrorism- and hate speech-related videos. While YouTube TV is a different beast altogether, strictly streaming TV-like offerings advertisers would deem “safe,” it launches in the midst of a particularly bad PR moment, which might hurt its early legs.

Overall, digital media continues to make inroads into the territory typically owned by linear TV with skinny bundles and over-the-top (OTT) services like YouTube’s. The quickly expanding swath of digital TV-like alternatives seek to accommodate a growing trend toward cord-cutting, but it’s also possible the space is getting overcrowded before it ever truly takes off. Certainly, the sheer number of current offerings is likely to be confusing for consumers.

read more here:

http://www.marketingdive.com/news/youtube-tv-googles-bid-to-conquer-ott-debuts-in-5-markets/439880/