YouTube is bigger than cable TV. Well, to be more precise, it’s bigger than any single U.S. cable network among the key demographic that includes those ages 18 to 49 – or so said Google during yesterday’s earnings call. The video-sharing network’s heavily engaged user base and its traction with mobile consumers were among the highlights discussed during the company’s better-than-expected second-quarter financial results, which sent Google’s stock spiking.
Google’s Chief Business Officer Omid Kordestani noted that visitors to YouTube’s homepage are up over three times year-over-year, and once there, they’re spending more time watching videos on the site than ever before. Growth in “watch time” on YouTube is now up 60 percent year-over-year, the company said – which is the fastest growth rate it has seen in two years. Meanwhile, mobile watch time has more than doubled from a year ago.
On mobile, YouTube is now seeing average session times of over 40 minutes, said Kordestani, which is up more than 50 percent over last year.
These numbers reflect a significant sea change in the way that people today are consuming video content. We’re no longer spending as much time watching big screen TV in living rooms, but are shifting much of our viewing to other platforms, including our phones and tablets. For YouTube in particular, session times of this length mean that the video-sharing network is no longer just a place users land to watch a single video – like something they’ve been pointed to via a friend, or a post on social media or a news site, for example. Instead, YouTube is now serving as a place where users are watching a series of videos back-to-back.
That speaks to the site’s success in becoming more of a discovery platform for video content, with its recommended and related video suggestions, and tools that let users track their favorite webseries and shows.
For younger users especially, YouTube is already equivalent to TV. According to a recent study from Miner & Co., TV is no longer the first choice for kids’ entertainment with 57 percent of parents reporting that their child prefers mobile devices to TV when it comes to video viewing. Additionally, 58 percent of kids in households with tablets have their own device, the study also discovered, and half the kids, when disciplined, will have their tablet taken away and are left “only” with TV.
That has created a generation of kids for whom “TV is punishment,” the firm noted.
But it’s not just kids who are shifting video viewing to the small screen, as YouTube’s numbers indicate – even if teenage users in the U.S. find YouTube stars more influential than mainstream Hollywood stars. Adults are also spending more time watching videos on mobile devices, thanks to contributing factors like smartphone growth, larger screen sizes, increased access to broadband and 4G services, better content selections, and more.
According to data from eMarketer, U.S. adults will spend 5 hours, 31 minutes watching videos each day in 2015, and they’ll spend 1 hour, 16 minutes on average watching video on computers, mobile devices and game consoles. Meanwhile, time spent watching video on mobile devices will increase from 30 minutes daily among all U.S. adults in 2014 to 39 minutes per day this year, the firm also said.
For YouTube, the shift to mobile and other over-the-top means of consumption is an opportunity to also shift TV advertiser budgets its way as traditional TV viewing declines.
That’s already starting to take place, it seems. Google said that its commitments following its “BrandCast” event (Google’s version of the TV industry’s upfronts), were three times higher. And the number of advertisers running video ads on YouTube is up more than 40 percent year-over-year. Plus, for YouTube’s top 100 advertisers, the average spend per advertiser is up over 6 percent year-over-year.
Earlier this year, a Wall St. Journal report said YouTube was not yet profitable, but instead posted around $4 billion in revenue in 2014 which was “roughly break-even” with regard to its bottom line.
Google, yesterday, dodged discussion of YouTube’s profitability as Google CFO Ruth Porat noted that the company didn’t break out profit by product. But she hinted that YouTube’s viewership numbers could help move the site in the right direction as advertisers start moving dollars from TV to YouTube.
“Our focus is on the opportunity to get larger budgets to move to YouTube,” Porat said.
Comment