Youtube: Is it losing to its competitors?
Have you ever heard of YouTube? Of course you have. But did you ever think about the way YouTube generates its revenue?
It is widely known that YouTube gets its revenue from offering ad-services. But recently the Alphabet subsidiary is struggling to make a profit. While the company generated revenue of $4 billion dollars in 2014, it is struggling to cover its costs (Levy, 2015). The company is facing more competition than ever with the industry rapidly changing and new online content viewing options appearing left and right. In order to battle this problem YouTube is taking action in a few ways.
Firstly the company has announced partnership with a few of the top content creators on YouTube. These include Smosh, The Fine Brothers, Prank vs. Prank and more. While YouTube has worked with content creators before, they have never paid them upfront for their services and create special content together (Levy, 2015). This is a big step for YouTube to venture into a new business within their services to expand their profits.
While the own content creation of YouTube is the right step towards sustaining the business and keeping the audience distracted from alternative options, this alone will not account for an immense increase in profits. Therefore YouTube is considering adding a subscription based pricing for additional services. The new subscription would remove ads while streaming for $10 a month (Newton, 2015). This would be a great added value for those people that watch YouTube on a daily basis and would enjoy an ad-free experience. I for one instance would love it if I did not have to wait for useless and irrelevant advertisement to finish so that I could watch the actual content that I came for. But this does not apply to all users of the platform. While 1 billion videos per month are viewed on Youtube, not all of its users are active daily and will not see the benefit of paying a subscription fee.
While Youtube is a very popular content streaming platform, I think they should refine how they want to be situated in the industry. With services like Netflix and Hulu and even Facebook’s video features, YouTube should step up its game and start looking into new ways of adding value while making the business profitable. If companies do not innovate and invest into making the business better, they will eventually stagnate and maybe even decrease in revenue.
What do you think YouTube could offer to its users, that gives the platform an advantage that competitors lack?