You must be surprised why big-data platforms are becoming so successful in generating creative content. Consider YouTube RED and Netflix, who are experts in analyzing consumer behavior for their digital media products in the entertainment market. Netflix is the most successful premium web content provider with 14 Emmy wins from 75 nominations, and YouTube RED is slowly trying to capture similar success with many young demographics.
YouTube VS YouTube RED
YouTube acts in reverse order. Here, the creator creates the content sticking to its originality and understands the proportional balance of viewership and new subscribers which are going to improve the YouTube channel. YouTube runs on an advertiser-driven business model with a simple motto – most viewed channel gets the premium advertisers generating more revenue for the Youtubers.
It’s simple, the advertiser bids the most only for the highest engaged YouTube channel.
On October 27th, Google parent company Alphabet shared YouTube’s third quarter (Q3) earnings, which outperformed last year with a 20% increase; and earned a total revenue of $22.5 billion. This increase also reflects the constant updates YouTube had this year for Content ID, YouTube user interface, new advertising formats, and their ever increasing YouTube influencers.
Revenue from advertising in Google’s share also showed an increment of 18%. Their third quarter ad revenue totaled $19.8 billion from $16.8 billion (last year)
Mobile video Ads going big
Social media generated revenue is showing its impact on video advertising as year-over-year advertising revenue report is increasing by a rate of 57%. According to the IAB’s Internet Advertising Revenue Report, mobile video ads on smartphones and tablets saw the biggest growth of all. It showed an incredible 178% increase over last year, accounting for $1.6 billion for the first half of 2016.
As per Google CEO Sundar Pichai, YouTube’s six-second “bumper” ads have shown strong results for marketers such as Universal Pictures – which is among the brands pairing these short videos with standard length ads on YouTube.
“We had a great third quarter, with 20% revenue growth year-on-year, and 23% on a constant currency basis. Mobile search and video are powering our core advertising business and we’re excited about the progress of newer businesses in Google and Other Bets”, said Ruth Porat, CFO of Alphabet.
YouTube Red’s success
YouTube Red, Netflix, HULU, and Amazon TV are the new emerging platforms that are thriving on this urging trend of understanding consumer behavior and delivering content as per analysis. But, in comparison of Netflix’s recent success, YouTube Red had 1.5 million paying subscribers as of late summer, with another 1 million users signed up on a trial basis (and not paying the monthly fee).
Note – Before calling YouTube RED as a failure, you have to check the limited number of countries YouTube RED is active right now. U.S, Mexico, Australia, and New Zealand are the only countries with active YouTube RED subscription; which means the service isn’t available to all of YouTube’s over 1 billion monthly users.
By the end of 2016, YouTube will have released more than 20 +YouTube Red Original series and movies. Originals like Scare PewDiePie, Bad Internet (CollegeHumor), Dwayne “The Rock” Johnson’s new half-hour action series, and including “Step Up” based series executive produced by Channing Tatum, shows YouTube’s efforts to bring quality content for its services.
YouTube’s Skinny Bundle
FYI, a skinny bundle is YouTube/Google’s way of offering millennials, their own web TV. T.V bundle packages are created by broadcasting companies in order to combine multiple broadcasting T.V channels to make genre wise segregation.
A Web TV bundle is a new Ad free live streaming service which is set to rival traditional cable TV services.
At present, Apple, Hulu, and YouTube RED are the companies that are in the process of building web based content; while providing traditional cable content that would sell live and on-demand programming from the likes of ESPN, ABC, Fox, and FX.
Apple is expected to launch its compact bundle of 25 channels, whereas Disney and 21st Century Fox (which own two-thirds of Hulu and control its management) are also in the process to launch web-based services for $30 to $40 a month.
Following the path of Apple, and HULU; YouTube RED has reportedly inked a deal with CBS to make the broadcast network part of its forthcoming skinny “Unplugged” bundle of cable channels.
This means that YouTube will be bundling their premium content alongside its homegrown programming (CBS & others) to initiate YouTube RED as their ultimate destination for entertainment.
Being an artist, movie buff and a media enthusiast, content writing is my career train. I am a proud alumni of Symbiosis Institute of Media Communication (Pune) and currently working for Vidooly.