YouTube is the world’s largest online video streaming platform. It is owned by Google and has over 2 billion monthly logged-in users.
Recently, it was seen that the company could match Netflix in revenue by years end. That is if it continues growing the way it has been in the last several quarters.
According to Alphabet (Google’s parent company), YouTube has generated a revenue of $6.01 billion in advertising, during the first quarter. The growth rate is 49%, as a year ago it was $4 billion.
It is twice the growth rate of Netflix, which reported 24% revenue growth in the first quarter. It is expected that the growth might slow down to 19% next quarter.
If YouTube continues its growth trajectory, it could generate revenue between $29 billion and $30 billion this year.
As for Netflix, it is expected to report $29.7 billion in revenue for 2021.
Since the company’s advertising revenue broke out in Feb 2020, investors have gotten a clear look at its growth streak. And then there was a pandemic which further gave it a big boost.
Recent reports say that YouTube was the biggest winner of the pandemic in terms of social media sites.
The video platform saw the graph grow from 73% of U.S. adults in 2019 to 81% in 2021.
Difference between the two services
Both the services have dramatically different business models.
Netflix generates a large amount of its revenue exclusively from its paying subscribers. It has almost 207 million subscribers.
YouTube, on the other hand, relies primarily on advertising. Several subscription services are also offered by YouTube, but those results are not out yet.
Netflix directly buys the content, while YouTube only shares a small amount of its ad revenue with independent content creators.
According to sources, YouTube users watch about one billion hours of videos per day. While Netflix is watched for almost 400 million hours.
A common victim
It is difficult to say who heads up ahead. But both are stealing attention and dollars from traditional linear TV.
The main reason behind YouTube’s growth is “Direct Response” (DR) ads and branding advertising. This has helped the company boost e-commerce for partners and brands.
Philipp Schindler, Google’s chief business officer said that the company has been “offering advertisers efficient reach to large audiences which are incremental to those found on TV.”
“DR was practically non-existent on YouTube a few years ago and it’s now a large and fast-growing business,” Schindler said. “People want the discovery process to buy a lot easier and I think we’re still scratching the surface with what’s possible with commercial intent on YouTube.”