Google’s announcement of YouTube TV last week is one that will be seen as an inflection point for the world of media and advertising.
YouTube TV, originally code-named “Google Unplugged” is the latest “Virtual MVPD”, joining DirecTV Now, PlayStation Vue, Sling TV and offering a set of live TV channels through digital means (as opposed to traditional MVPDs who deliver television to the home through their own infrastructure like satellite, telecommunications lines and terrestrial cable) for a monthly fee.
While each of these players have their own unique features, they are generally providing the same set of offerings: a “skinny bundle” of TV networks, available for viewing on any internet connected device at a very competitive price point as compared to the larger bundle of many channels from your local cable provider. Basic feature set similarities aside, YouTube TV, by nature of its parent company, will create waves, not ripples across the sea of TV viewership, distribution, and advertising.
YouTube TV basics
YouTube TV holes
Why is Google doing this?
It’s been rumored that Stanford University, with its 16K student population, has such a large endowment and various incomes that the tuition dollars are gravy. The same can be said for the subscription fees for YouTube TV’s package of impressive broadcast and cable networks. Upon launch, this will likely be a loss-leader for Google and will grow more so as additional networks are added to the bundle as the cost of content will certainly not be covered by the subscription fees. So how and why does Google do this?
Nearly all of Google strategic business decisions are directly or indirectly tied to how their advertising businesses might be impacted. Over 85% of the revenues of the behemoth are from advertising and that’s without any significant portion coming from the $220B worldwide TV advertising market. YouTube TV begins to establish a foothold in TV advertising for Google.
YouTube will also be planting the seeds for expansion of their digital advertising businesses through the marriage of search and display advertising within the television content environment. Each of those businesses will scratch the backs of the others.
In part 2, Jason discusses major influences that Google’s television moves will take on the industry and the video consumption experiences of viewers.
Jason is VP, Strategic Development at clypd.