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YouTube Will Drive Alphabet's Growth


Under our noses, YouTube is evolving. People generally think of YouTube as a place where anyone could upload a video and hope it goes big, but within the past year it has also become a platform for premium quality content. The content could be a Vlog (video log), or any manner of video with well-developed production from a frequent poster, (think video recipes, consumer product reviews, science experiments, how-to's) the list is vast. It could even be television stations uploading content from their shows. The result is that viewers are coming back to YouTube on a daily basis to watch new premium content.

On this blog I have previously expressed my concerns regarding companies highly dependent on advertising revenue. YouTube is certainly helping to drive Alphabet’s ad revenue and now the transition to more frequent and higher quality content is allowing Alphabet to slowly roll out a product called YouTube Red. YouTube Red is a paid subscription service that gives the buyer access to premium content from their favorite creators, which is otherwise unavailable to the general public. The subscription moves Alphabet away from an advertisement dependent model, and moves them towards a more consistent revenue stream. The best part of the deal is that YouTube does not need to pay for the content itself, just share the ad revenue or subscription revenue.


If Alphabet is able to successfully transition YouTube into a subscription model, it could begin to compete with the Netflix’s and Hulu’s of the industry. Netflix spends millions to create its own original content to draw users. YouTube is based off of completely original content and, unlike Netflix, new content is posted every single day. YouTube is set to be a contender in the battle of subscription-based content providers. 

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