YouTube Is 1/4 Of Google’s Value
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YouTube Valuation: The Video-Sharing Platform Could Be Worth $160 Billion
It’s been a busy few weeks for YouTube. On May 16, 2018, the platform announced two new services: the replacement of YouTube Red with YouTube Premium and YouTube Music. In the days following, investment bank and financial services company Morgan Stanley pegged YouTube’s worth at $160 billion.
In its earning calls, parent company Alphabet doesn't extricate YouTube's earning from Google's. However, Google’s market capitalization is estimated at $742 billion. If YouTube’s $160 billion valuation is accurate it could account for more than one-fourth of Google’s total value.
The valuation estimate also sets YouTube’s worth as greater than a number of business giants. According to Business Insider, YouTube’s worth surpasses Disney’s market cap of $155 billion, Comcast’s of $150 billion, and Netflix’s of $141 billion. In the following post, we’ll explore facts and figures supporting YouTube’s value and delve into its two new features that could contribute to its continued financial success.
3 Statistics Supporting YouTube’s Massive Valuation
Not only does Morgan Stanley’s estimate of YouTube’s worth speak to its online influence, a number of other facts and figures point to the platform’s ever-increasing popularity and monetary value. Check them out below:
1. The number of YouTube channels earning six figures has grown over 40%.
On April 23rd, Alphabet held its Q1 2018 earnings call. During the call, the company shared that within the past year the number of YouTube channels earning six figures annually has grown upwards of 40%. Its most followed creator, Felix Kjellberg — aka PewDiePie — reportedly earns $12 million a year.
The continued monetary success of influencers on the platform serves to add to the platform’s value. Popular YouTubers attract and engage millions of fans, effectively making the platform an internet destination and as such a lucrative platform for advertising.
2. YouTube now boasts 1.5 billion monthly active users.
Although Alphabet didn’t allude to the size of YouTube’s user base during its Q1 2018 earnings call, the platform has 1.5 billion MAUs as of Q4 2017. The platform’s enormous user base is another factor that speaks to its overall value.
1.5 million people equate to more than a third of the globe’s 4 billion internet users. Not only is more than one-third of the internet using YouTube, the platform is the second most visited site on the internet, behind only Google. However, visitors spend an average of 8 minutes and 30 seconds on YouTube.com each day, which eclipses the 7 minutes and 19 seconds users spend on Google.com.
3. 41 million people watched YouTube’s 2018 Coachella live stream.
YouTube’s value can also be accredited to its growing live stream video success. In April, the platform hosted an exclusive Coachella live stream on its homepage. In its Q1 2018 earnings call, Alphabet reported that 41 million people from across the world tuned in to watch the live stream. According to another source, Beyonce’s historic performance at the annual music festival garnered 498,000 simultaneous viewers.
YouTube’s main live streaming competitor is Twitch, which was acquired by Amazon in 2014. Twitch maintains 10 million DAUs, 50% of who spend upwards of 20 hours a week on the platform. Nevertheless, efforts such as YouTube’s Coachella partnership point to the platform’s increasing emphasis on live streaming, an area that could add significantly to its monetary value in coming years.
What Do YouTube’s Two New Services Mean For Its Monetary Value?
In the past week, YouTube announced the launch of two new services: YouTube Music and YouTube Premium. Both will serve to further monetize YouTube as a business by way of monthly subscription fees.
Similar to Spotify or Apple Music, YouTube Music is a music streaming service available as of May 22, 2018. The service takes the form of a mobile app and a desktop player and users can use it to access millions of songs, albums, artists, and playlists.
According to YouTube, users can either use a free, ad-supported version or pay a $9.99 monthly membership to download and listen to music ad-free. From a monetary standpoint, the service could add significantly to YouTube’s value if it can compete with top competitors like Spotify and Apple Music.
Morgan Stanley analyst Brian Nowak notes that music is a growing market that could reach 15% of smartphone users by 2022, a trend YouTube Music could capitalize on. Nowak also asserts that for every one million non-paying YouTubers that become paying users, YouTube will add 1% to its revenue. If by 2022 YouTube Music reaches 25 million users, it has the potential to generate $3 billion in revenue.
Similar to YouTube Music, YouTube Premium was also announced on May 16, 2018. The streaming service will replace YouTube Red, which launched in 2015. It will add to YouTube’s bottom line through its $11.99 monthly subscription fee, an increase from YouTube Red’s $9.99/month fee.
Through the service, users will have access to YouTube Music, a selection of original shows and movies, and an ad-free free experience across YouTube that allows for downloading. YouTube has yet to disclose when YouTube Premium will be available other than to say it, “rolls out soon.”
Increasingly, consumers are watching less cable TV and turning online. YouTube reports that on mobile alone it reaches more 18-34 and 18-49-year-olds than any cable TV network in America. YouTube Premium plays to this growing trend and as such could be incredibly profitable. In 2017, global internet users grew by 7%, global mobile users by 4%, and global social media users by 13%.
Similar to streaming services like Netflix, Hulu, and HBO GO, YouTube Premium gives users on-demand video that they can take with them. If the service can compete with competitors it’s likely to add to YouTube’s growing value.
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May 24, 2018 By Mediakix Team