Parent company Alphabet's revenue from subscriptions, platforms and devices, which includes YouTube subscriptions, is also poised to expand in the coming years.
YouTube's dominance in online video sharing and content creation is undeniable. With over 2 billion monthly active users, it remains the go-to platform for video content, generating substantial revenue through ads, sponsorships, and other monetization methods.
YouTube, often overshadowed by its parent company Alphabet Inc., is a media giant hiding in plain sight. According to analysts at Needham & Co., the streaming unit is worth at least $455 billion on its own, which is more than 50% above Netflix Inc.'s market cap. Despite this massive valuation, YouTube's true worth remains underappreciated due to Alphabet's conglomerate structure.
If even a small portion of YouTube were separately tradable, it could add significant value to Alphabet stock. However, there are no immediate signs of Alphabet considering such a separation. Regardless, YouTube's impact on the media landscape is undeniable, and its dominance in streaming continues to shape the industry.
YouTube primarily generates revenue through advertisements. It embeds targeted ads directly into the video clips users watch and promotes featured content. In the first three months of 2023, YouTube earned $6.69 billion from advertising, and in 2022, it generated $29.23 billion.
Additionally, YouTube's other revenue sources include YouTube Premium subscriptions, channel memberships, Superchat donations, YouTube TV, and merchandise commissions.
YouTube has a dominant and growing share in streaming, as consumers shift to such platforms and away from broadcast and cable TV. Ad revenue from the platform is expected to grow by nearly 17% to $37 billion in 2024 and by another 14% to $42 billion in 2025, according to estimates compiled by Bloomberg.
Alphabet’s revenue from subscriptions, platforms and devices, which includes YouTube subscriptions, is also poised to expand in the coming years. At Netflix, revenue is expected to be about $38.7 billion in 2024, with almost all of that derived from streaming, while YouTube accounts for about 10% of its parent’s total sales.
A recent survey of streaming platforms by TD Cowen showed that while Netflix still dominates in most TV categories, YouTube is often not far behind. And, it’s the top choice for watching content on a mobile phone.
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