YouTube looks to new TV features as ad and subscription revenue rise

YouTube contributed to Google parent Alphabet’s strong showing in the second quarter, with YouTube ad revenue growing to US$7.665 billion, up from US$7.34 billion last year.

Alphabet now plans to bring new features to YouTube’s presence on connected TV, which is seen as a key growth platform for the video streaming service.

On the Alphabet Q2 analyst call, Google chief business officer Philipp Schindler highlighted the growth in YouTube ads of 4%, while YouTube subscriptions lead growth in the ‘Google other’ revenue segment of 24%. Alphabet upped the pricing of YouTube Music and Premium subscriptions last week, highlighting its confidence in the appeal of the product.

Schindler also highlighted the future potential of YouTube’s introduction of 30-second unskippable ads, coming soon to the YouTube Select offering that he said was responsible for over 70% of impressions on the TV screen. “Thirty-second ads are a TV industry staple, and now YouTube is bringing our advanced audience capabilities and unparalleled reach to the format,” he said.

Schindler also said that YouTube was “exploring new Pause experiences so brands can drive awareness or action when you hit pause”, highlighting the potential extra ad opportunities that connected TV usage can offer.

Sundar Pichai

Schindler said that YouTube was continuing to build partnerships, highlighting its agreement for an expanded presence of Warner Bros. Discovery’s Max, inclusive of a Max/NFL Sunday Ticket bundle on YouTube TV.

YouTube’s ad revenue growth was led by a 4% uplift in brand advertising, followed by direct response advertising.

CEO Sundar Pichai hailed the strong performance of YouTube, an in particular its growth in connected TV both in the US and internationally, as well as premium subscription growth.

“Earlier this year, we shared that revenues across YouTube products were nearly $40 billion for the 12 months ending in March. I’m really pleased with how YouTube is growing audiences and driving increased engagement. YouTube Shorts are now watched by over 2 billion logged-in users every month, up from 1.5 billion just one year ago,” said Pichai on the analyst call.

“The Living Room remained our fastest growing screen in 2022 in terms of watchtime. We’re reaching more than 150 million people on Connected TV screens in the US, and seeing growth and momentum internationally. And on subscriptions, there’s good growth. Late last year, we announced over 80 million YouTube Music and Premium subscribers.Signups for NFL Sunday Ticket kicked off in April, and we look forward to hosting our first football season on YouTube this fall.”

Alphabet’s overall revenues, boosted by digital advertising in general, rose 7% to US$74.6 billion, comfortably beating analysts’ expectations.