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For the first time ever, YouTube’s subscription and advertising revenues have surpassed $50 billion over four quarters.
Sundar Pichai, CEO of YouTube parent companies Alphabet and Google, revealed the number on the company’s Q3 2024 earnings call on Tuesday (October 29).
“Together, YouTube TV, NFL Sunday Ticket, and YouTube Music Premium are driving subscription growth for the platform,” Pichai told analysts on the call.
Alphabet doesn’t typically break out YouTube subscription revenue in its earnings numbers, as that falls within the “Google subscriptions, platforms and devices” category.
However, the company does break out YouTube ad revenues, which came in at $8.92 billion in Q3, up 12.2% YoY and beating analysts’ expectations of $8.89 billion, per StreetAccount.
Revenue from Google subscriptions, platforms, and devices rose 27.8% YoY to $10.66 billion in the quarter.
“We continue to have significant growth in our subscription products, driven primarily by YouTube TV and YouTube Music Premium, as well as Google One, primarily due to increases in the number of paid subscribers,” Alphabet and Google Senior Vice President and Chief Financial Officer Anat Ashkenazi said on the call.
And while YouTube Music is a key part of the platform, Alphabet’s execs made it clear that their focus these days is on transforming YouTube – the number one streamer in the US, per Nielsen – into a Netflix and TV competitor.
“We’re leaning into the living room experience with multiview, and a new option for creators to organize content into episodes and seasons, similar to traditional TV,” Pichai said.
Google Senior Vice President and Chief Business Officer Philipp Schindler noted that the company is using AI to “greatly improve” YouTube’s recommendations functionality.
“Driven by Gemini, our large language models have a deeper understanding of video content and viewers’ preferences; as a result, they can recommend more relevant, fresher, and personalized content to the viewer,” Schindler said.
Schindler said YouTube creators are increasingly fashioning content meant for the big screen, and the effort is “paying off,” with the number of creators making a majority of their earnings from views on big screens rising 30% YoY.
“Together, YouTube TV, NFL Sunday Ticket, and YouTube Music Premium are driving subscription growth for the platform.”
Sundar Pichai, Alphabet
Alphabet is also focused on live sports viewing – an area in which its principal competitor in the TV streaming space, Netflix, is notably lacking.
“During the Olympics, content from Paris 2024 had over 12 billion views on YouTube. More than 850 million unique viewers watched over 40 billion minutes of content, with 35% on their TV screens,” Schindler said.
“YouTube is becoming a premier destination for sports watching.”
“YouTube is becoming a premier destination for sports watching.”
Philipp Schindler, Alphabet
YouTube Shorts – the platform’s answer to the phenomenal popularity of short video platform TikTok – continues to close the monetization gap with long-form video, Schindler said.
Among channels that upload to YouTube every month, 70% are uploading shorts, Schindler said, noting the company’s recent announcement that it will be increasing the maximum length of Shorts from the current 60 seconds to three minutes – evidently a “top-request feature” among creators.
Schindler noted that Google experienced “a slight tailwind” from election-related ad spending in the US in the third quarter, “which was a little more pronounced in YouTube ads.”
Overall, Alphabet’s earnings beat expectations, with revenue coming in at $88.27 billion for the quarter, versus analysts’ expectations of $86.3 billion.
Operating income rose 33.6% YoY to $28.52 billion, and operating margin rose four percentage points to 32%. Diluted earnings per share were $2.12, beating forecasts of $1.85.
Alphabet’s share price spiked 4.4% within minutes of its earnings release on Tuesday, and the positive run continued Wednesday (October 30), with the share price up another 4.5% to around $178.90 on the NASDAQ as of mid-day Eastern time.Music Business Worldwide