YouTube Revenue Could Surpass Netflix Numbers This Year

Google’s YouTube earned $6.01 billion in advertising revenue in Q1, a 49 percent growth from the $4 billion a year ago. In Q4, YouTube’s growth rate was 46 percent. But, more notably, its current growth rate is almost twice that of Netflix’s, which reported a 24 percent revenue bump in Q1 and anticipates 19 percent growth in Q2. Market data provider Refinitiv reported that, should the trajectory continue, YouTube is on track to take in between $29 billion and $30 billion in revenue in 2021, compared to Netflix’s expected $29.7 billion.

CNBC reports a Pew Research Center report revealed that, “YouTube was the biggest winner of the pandemic in terms of social media sites,” with usage among U.S. adults that grew to 81 percent in 2021 from 73 percent in 2019. It notes that the two platforms have “dramatically different business models,” with Netflix’s revenue coming “almost exclusively from its paying subscribers … while YouTube relies primarily on advertising.”

Netflix plans to spend $17 billion on content this year, “while YouTube shares a significant portion of its ad revenue with independent creators.”

LightShed Ventures partner Rich Greenfield pointed out that, although Netflix dominates in terms of subscribers (207 million), “YouTube users watch one billion hours of video per day while Netflix viewers tune in for 400 million hours.”

Google senior vice president and chief business officer Philipp Schindler reported that YouTube growth is due to “direct response” (DR) ads and brand advertising, which has “helped boost e-commerce for partners and brands.” “DR was practically non-existent on YouTube a few years ago and it’s now a large and fast-growing business,” he 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.”

GroupM president Brian Wieser said that YouTube, “owned by the most sophisticated and powerful AI company,” is a solid alternative beyond TV to lure advertisers. “There’s no one that even comes close,” he said. “YouTube is now best positioned to deliver on something we’ve talked about for a decade, which is two people watching the same live event, but getting different ads,” adding that, “linear TV’s future is grim, at best.”

CNBC notes the Pew report found that, “YouTube’s popularity is especially high among 18-to 29-year-olds, with 95 percent of them saying they use the service.” Of that same cohort, 71 percent said they use Instagram, 70 percent said they use Facebook and 65 percent said they use Snapchat. The same report stated that 69 percent of U.S. adults visit Facebook, a figure that has “remained relatively flat over the past five years.”

Yahoo Finance reports that Jefferies tech analyst Brent Thill wrote, “YouTube on connected TV is now the go-to video viewing experience instead of linear TVs, and ad budgets are following quickly.”