Google made recently a major push into the streaming universe and it can seen as a paradigm shift. With the introduction of its YouTube Primetime Channels it competes directly with other streaming services. At first glance this is just another player offering linear TV programmes, but one should never forget that Google is very meticulous in its strategic thinking when it moves into markets – especially when they seem so crowded like the streaming universe. Google is going after the Big Screen and it has very good reasons to do so.
Firstly, it is all about being in pole position in the race for dominating the living room: and the Big Screen is exactly that place where you want to be.
People moved back to watching and using the Big Screen (a.k.a. the classic TV Set) more often during the pandemic. This trend remained and even more of the younger generations started to enjoy the benefit of watching video entertainment on the tv set rather than being glued to the tiny screen on your mobile or tablet.
Smart TV slowly turned the Big Screen into a central media hub: think of the Smart TV like you would think of smartphones – just with a bigger screens. More services and functionalities became available over time and more people use the big screen now for more than you watching that movie or sports event in HD.
Soon the Big Screen and its TV OS or UI will migrate into being a Super App and indeed the Pole Position for everything you need to manage your daily life. You generate a lot of data as a nice little side effect – and that is what everyone is after eventually… including Google.
Hence, as Google you must be more prominently placed on that central hub and there is no better way to achieve this by providing entertaining content for free to the audience: YouTube or “PrimetimeTV” enters the scene.
But as the below chart demonstrates there is hard cash involved in this decision as well. While Google Search Ads has shown some growth over the years, the real potential in advertising is in Online Video Ads. That is the area where Google as a group saw the largest growth in revenue over the past 5 years. This growth has slightly been damped in 2022 but all forecasts predict a better growth track for Online Video Advertising for the years to come and that lots of budgets will be shifted into that direction.
So it makes sense both strategically and commercially to shift gears and focus on YouTube growth and putting it onto even more screens.