Alphabet Inc.’s GOOG GOOGL online video-sharing platform, YouTube’s aggressive pursuit of higher ad revenue, raises questions about potential consequences and trade-offs.
What Happened: During a recent conference, Neal Mohan, the new chief of YouTube, revealed that the platform generated a substantial revenue of $40 billion in the past 12 months, primarily driven by advertisements, reported Business Insider.
See Also: YouTube Tests’ Premium 1080p’ Option For Mind-Blowing Video Clarity: What You Should Know
Mohan chose not to disclose the specific breakdown of YouTube’s revenue between ads and subscription products. Still, he emphasized that ads remain the dominant revenue stream and the primary growth driver across all YouTube offerings.
“We always start with advertising because that’s a huge part of our business and the primary driver of our growth across YouTube products.”
Notably, YouTube’s ad revenue experienced a decline for three consecutive quarters, with a 2.6% dip to $6.7 billion in the most recent quarter, the report noted.
Mohan’s — who earlier this year replaced Susan Wojcicki as YouTube CEO — comments align with the platform’s recent initiatives, such as the introduction of 30-second unskippable ads for televisions and the implementation of measures that prohibit the use of ad-blockers on the platform, which some Reddit users have observed.
Why It’s Important: For the unversed, earlier this week, YouTube announced a change in its ad format, replacing two consecutive 15-second ads with a single 30-second ad on top-performing content on connected TVs. However, it doesn’t imply the complete elimination of shorter ads.
Subsequently, YouTube justified its decision to prohibit ad-blockers and prioritize ads to sustain its free accessibility for users worldwide. The platform highlighted that to avail of the ad-free experience, individuals should opt for YouTube Premium.
As of November last year, YouTube reported approximately 80 million subscribers for its Music and Premium services, aligning with Google’s earlier commitment to invest further in YouTube’s subscription offerings.
However, the recent experiment suggests that the tech giant is inclined to limit the features of its free offerings, potentially nudging users towards paid subscriptions or giving them no other choice than watch unskippable ads.
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