Can Alphabet’s Youtube be the next Netflix?
Update: Alphabet aggressivly expands its Youtube TV, a paid membership offering Live TV from major broadcast networks, popular cable networks, and premium networks. The users can watch the live stream on all of their screens, including on mobile phones and tablets, using Chromecast on TV, and on a web browser on their computer. Youtube TV also features contents from YouTube creators, YouTube Red Originals, and trending YouTube videos. According to Google’s announcement, Youtube TV is now available on 50% of US households.
from the Google’s announcement:
“YouTube TV includes:
- Nearly 50 networks, including live local feeds from ABC, CBS, FOX and NBC, plus popular cable networks like ESPN, AMC and FX, and local sports networks from NBC Sports in 13 markets, Fox Sports in 22 markets, and now NESN in Boston.
- A cloud DVR, with no storage limits that travels with you within in the United States so you can stream recordings on any device, whenever and wherever you want. It enables you to record live TV and never run out of storage plus record shows simultaneously, without using precious data or space on your phone. Each recording will be stored for nine months.
- YouTube TV can be watched on any screen – mobile, tablet or computer – and easily streamed to your TV with a Google Chromecast, Chromecast built-in TV, and AirPlay through Apple TV.
- Six accounts per household. Every YouTube TV membership comes with six accounts, each with its own unique recommendations and personal DVR with no storage space limits. You can watch up to three concurrent streams at a time.
- Half the cost of cable with zero commitments. A YouTube TV membership is only $35 a month and there are no commitments – you can cancel anytime.”
Netflix generated a revenue of $8.8bil. in 2016 with an astounding YoY growth rate of %30. The Company’s market capitalization is almost $80bil. and price to earnings ratio is very high: 217 because of the high growth rate of the Company which has a lot of room to grow.
The financial ratios of Youtube are unknown because Alphabet doesn’t publish them as a separate segment in financial reports. If youtube were very profitable Alphabet would separate it from the Google’s Segment.
Youtube and Netflix don’t have the same business model. Youtube’s revenue comes from Google’s AdSense and the content is usually free.
But Youtube made some important improvements which would challenge the Netflix:
– Youtube videos can be watched on smart TV’s
– Youtube Red requires paid membership which makes content creators independent from ads and promotes quality content.
– Contrary to the Netflix, Youtube Red also offers premium Music.
– Youtube already launched live TV stream, a paid service Youtube TV as a Streaming Video On Demand.
– According to Bloomberg, to provide original Content, Youtube will fund more than 40 original shows with hundreds of millions to lure tv celebrities.
Youtube has several advantages: Youtube’s monthly active users are already more than 1.3 billion which is growing fast. Youtube belongs to Alphabet’s ecosystem which promotes Youtube, especially Google’s search engine. Youtube’s free content publishing enables novice artist to grow their audience and transfer their account to Youtube Red. They will unlikely switch to Netflix or to Amazon. And Alphabet’s artificial intelligence can make better suggestions to the audience which can improve user experience on the platform.
Alphabet has a huge growth potential on Youtube and the opportunity to diversify its revenue sources which are coming mainly from advertisements business. But the Company also has rivals like Facebook and Amazon. But Facebook couldn’t monetize its videos yet and therefore, Youtube’s platform is technologically more advanced than Facebook. Compared to Facebook and Amazon, Alphabet has more advantages to own the lion share of the market.
For the List of Corporate Analysis, click here
For the List of Technical Analysis, click here
No Investment or Financial Advice.
GET UPDATES VIA EMAIL
Sign up Now
You can unsubscribe at any time.