Company / division: YouTube
Google has apparently now, like Facebook and Twitter, found at least some spending by actors tied to the Russian government on its platforms, including YouTube and Gmail, and the Washington Post says the amounts spent were in the tens of thousands of dollars. However, the New York Times reports that the actual amount definitely spent by entities connected to the Kremlin was much smaller, at around $4,700, while there is another $53,000 that was spent by Russian entities which have not yet been proven to have a connection to the government. Unlike the money spent on Facebook, of course, ads on Google’s platforms have far less potential to drive viral activity, meaning that the direct reach of the ads was likely much of the total reach, and that amount of money wouldn’t have bought much of that. Google doesn’t seem to have commented on the record about any of this yet, but my guess is that the Times story was pushed by Google PR to provide context on the Post one. But this does draw Google further into the mire that’s already engulfing Facebook and to a lesser extent Twitter, something of which we saw further evidence over the weekend.
Janko Roettgers at Variety has done a great bit of analysis on the impact of the removal of YouTube from the Echo Show on sales and reviews of the devices. What he found is that the sales ranking in Amazon’s bestseller list seems to have fallen significantly over the past week or two. That’s not surprising given that as I said when the news was first announced, YouTube was a somewhat integral part of the value of the device’s screen, and Amazon had far more to lose from the end of the partnership than Google. It’s still not clear what exactly prompted the end of that relationship – right at the end of the Variety piece, there’s a quote from the Google executive who manages its competing Home portfolio there, in which he says the company is still evaluating the speaker-with-screen segment. So that competition may or may not have prompted it, and I’m still inclined to believe that it may have been a tit-for-tat against Amazon for scheduling a big hardware unveiling the week before Google’s own.
YouTube has licensed nine of its original shows and movies, which were until now exclusive to its Red subscription service, to a third party in order to generate additional licensing revenue. Two of the great advantages of producing original content are exclusivity and licensing rights, though the two are often somewhat mutually exclusive, but YouTube appears to be playing both sides here, keeping the shows as exclusives for a period of time before broadening availability to develop a content licensing revenue stream too. That’s not a strategy I would ever see most of the other companies developing original content employ in such a windowing approach, but it likely suits YouTube reasonably well given its smaller subscription footprint and the increasing presence of aggregators and others who want to show YouTube content to fans on other platforms like traditional TV, somewhat ironically. But this will also allow YouTube to monetize its content in other geographies where the Red service hasn’t launched, whereas Netflix is now very focused on its near-global presence.
YouTube TV Will Advertise During World Series Games (Oct 3, 2017)
Google’s YouTube TV online pay TV streaming service will be a sponsor of this year’s baseball World Series, marking its first big ad push to gain new subscribers. That’s a reflection of the service’s broad reach now that it’s secured rights for local channels and launched in 49 of the 50 largest US markets, covering 2/3 of the US population. But it’s also something of a funny choice given that YouTube still doesn’t have the Turner channels, of which TBS carries the National League playoff games leading up to the World Series, though of course it’s possible that YouTube TV will have added those channels by the time baseball season rolls around again. In general, though, YouTube TV feels like it has very low awareness among cord cutters in general, in part because it has limited its rollout to areas where it can offer local channels, and hasn’t made a ton of noise about launching in new markets. With a big sponsorship like this, that could change, and it could quickly become one of the more popular pay TV streaming services out there, giving existing brands like Sling, DirecTV Now, PlayStation Vue, and others a run for their money.
Google Pulls YouTube from Amazon’s Echo Show Device (Sep 27, 2017)
Amazon announced last night that Google had pulled its YouTube app from the former’s Echo Show device, the company’s first screen-based voice speaker. YouTube was one of very few video options available on the Echo Show, with Amazon’s own Prime Video being the main alternative. YouTube videos would show up in response to certain searches, especially ones relating to video, and although I doubt anyone bought an Echo Show solely to use YouTube, losing it is a blow to the company. There’s a certain irony that this breach in the relationship between Amazon and Google has occurred in a week when we’ve seen signs of detente between each of these two companies and Apple, with Amazon again selling Apple TV hardware and Apple replacing Bing with Google as the search engine in Siri and OS-level search in its devices. I joked on Twitter that it’s almost as if there’s some universal equilibrium of big tech companies not playing nicely with each other that has to be maintained.
Of course, this is all part of the broader ongoing competitive dynamic between these various companies, which all need each other to varying degrees but often place limits on their interactions in areas where they can afford to do so. Though Amazon says the decision was unilateral and unexplained, Google said the implementation of YouTube on the Echo Show violated its terms of service, which makes you wonder whether the companies launched in a hurry and agreed to settle terms later, or whether Amazon simply built the YouTube app without Google’s input and hoped it wouldn’t mind. My guess is that the ToS violation in question here revolves around the lack of options for managing a YouTube account – I sent my Echo Show back after testing it for a review, but if I recall correctly, many of the standard YouTube features on other platforms were not available there, which was reflective of the Echo Show’s broad limitations on interactivity and functionality, something I pointed out in my review. YouTube was in some ways very much behind a platform wall which Amazon erected in front of it, and it seems Google finally decided it had had enough.
It’s worth remembering that Google and Amazon compete directly across several areas and have limited their cooperation in several others as a result: they compete in voice assistants and devices, for starters, but also in cloud services, in product search, in tablets (albeit indirectly), in grocery deliveries, in TV boxes, and so on. And as a result there have been limits to their cooperation – Amazon stopped selling Chromecast devices a while back and generally doesn’t participate in the Google Shopping feature alongside other major retailers, and appears to have resisted adding Chromecast features to its video apps. It’s possible that Google pulling YouTube was a way to exert pressure to get Amazon to sell Chromecast devices again as it has Apple TV devices – the timing likely isn’t coincidental. And Google certainly has far more leverage in this spat than Amazon – the Echo Show is a meaningless contributor to YouTube’s overall success, but the presence or absence of YouTube on the Echo Show is a much bigger deal for that device and its appeal. I don’t think Google will be in any hurry to settle the dispute unless it’s able to extract some concessions, and I wouldn’t be surprised if that includes Amazon selling Chromecasts again.
via The Verge
Google has announced several new tools for advertisers using its platform to reach users with video ads, and they highlight just how sophisticated the YouTube ad platform is becoming, at a time when Facebook is still struggling with basic formats and helping creators tweak their video formats to work with its ad limitations. There are four parts to the YouTube announcement: custom affinity audiences, which allow advertisers to reach users based on profile-based interests including recent Google searches; customizing video ads by context on the fly using automation; stringing together multiple ads to tell a story or react to user responses; better online-to-offline attribution. To my mind, the custom video ads are the most interesting thing here – they allow advertisers to upload a set of assets and have the system automatically mix and match them to create ads that feel like they’re customized based on the video the user is watching. As this TechCrunch article points out, that’s likely to make the videos more memorable, but it may also cross the “creepy” line for some viewers, and that’s the risk all highly-targeted advertising takes. Various elements of what Google is announcing take advantage of its increasingly strong AI and machine learning techniques as well as the breadth of its tracking of users (for better or worse) across the various properties it owns, and the latter may in future be hampered by increasing limits on this kind of targeting which will come into effect in Europe soon.
Variety has a quick run-down of some new data from App Annie about the usage of various mobile video apps in the twelve months to July 2017, and it shows YouTube to be dominant in that category, with 80% of total time spent for the top 10 apps. Also notable is that YouTube grossed more than Hulu on the strength of its YouTube Red subscription service, suggesting that it may be doing better than widely perceived, though that may also reflect YouTube’s role as a more mobile-centric platform while many users may pay for their Hulu subscriptions through a computer or TV box. Also worth noting is that over half the top ten video apps come from non-traditional TV brands – only HBO, Starz, CBS, and Showtime hit the top ten, while the rest are all digital-native brands. Also notable is the fact that all of those traditional TV apps have pursued the same successful strategy of opening up their entire libraries for digital rather than trying to create a digital service that’s complementary to traditional TV – that’s the winning strategy in this space, and Disney should take note as it readies an ESPN direct to consumer service for early next year.
Facebook and Google Dominate Top 10 US Apps List (Aug 24, 2017)
Alphabet announced its Q2 2017 earnings this afternoon, and beat analysts’ estimates of revenue and earnings pretty handily, yet its stock still fell 3% in the first couple of hours afterwards, presumably because the stock has been bid up so much in recent weeks and there’s some profit taking going on. The results were pretty strong across the board, with no area of performance looking weak. The core Google business continues to grow rapidly, with the same three drivers – mobile, YouTube, and programmatic – cited once again, suggesting there’s still been no material longer term fallout at Google from the boycott against it earlier this year or the programmatic cutbacks that have followed. It’s clear that Google is investing heavily in its cloud infrastructure and personnel – CFO Ruth Porat said on the call that many of the 1600 new hires this quarter were once again directed at that part of its business. That business is still frustratingly buried in the broader Google “Other” segment along with disparate bits and pieces like Google Play and hardware revenues, so it’s impossible to parse precisely, but it’s likely that the growth of cloud services is a big contributor to overall growth in that segment. But hardware was also called out, though only Google Home and Google WiFi were called out specifically, suggesting Pixel sales are no longer such a big driver. My own recent surveys suggest Google Home in particular is selling well, taking about half the share that Amazon Echo does, with almost no other competitors in the market. The Other Bets continue to shrink their still massive losses, mostly by growing revenue faster, though the company has also reduced its capital expenditures significantly since the Google Fiber retrenchment began in late October last year. Alphabet did account for the EU fine, which it has not yet decided to pay, in its financials, but also provided a version of its profit figures which was more easily comparable with last year’s, and those showed strong growth in both revenues and profits. At this point, it’s hard to see a near-term reason for bearishness about Google or the broader Alphabet business – it now has several separate lines running well and throwing off decent profits, while it’s investing in others that should drive both in future. The one other thing worth noting, though, is that traffic acquisition costs for Google’s own sites continue to rise rapidly, with the rise driven by the payouts Google has to make to mobile vendors who send traffic its way, including Apple, Samsung, and to a lesser extent other Android vendors. That certainly doesn’t seem to be affecting profits yet, but it’s a sign of the increasing share of revenue Google is having to pay out to companies that control much of the traffic that comes its way on mobile.