Newsletter 5th February: YouTube is a $15 billion Business

NEWSLETTER

5 February 2020

Earning calls for Q4 2019 have been frequent during the last weeks. Focusing on the FAANGs, overall performance was solid across the board. Further, the industry was given a special treat from Alphabet during its call on Monday – for the first time ever, YouTube´s contribution to Google´s total revenue was disclosed.

Q4 2019 has overall been a strong quarter for the FAANGs, though Facebook seems to struggle financially. Although its number of users continues to increase (currently at 2.5 billion active users per month), net income only grew by 7% YOY ($7.3 billion), a modest figure compared to 61% growth over 2018. Headcount at the Facebook office grew by 26% YOY, due to its increasing focus on privacy issues, causing a surge in expenses. Amazon had a strong quarter with revenue growth at 21% YOY. CEO Jeff Bezos stated that the company now has more than 150 million Prime members and that they watched twice the number of hours of original movies and TV shows on Prime Video in Q4 compared to 2018.

Apple reported its fiscal Q1 and disclosed revenues of $91.8 billion (+9% YOY) – surpassing analysts’ expectations. The increase in sales was mainly attributed to iPhones, Wearables and Services although the service segment (including Apple TV+) grew slightly below expectations, possibly affected by the launch of Disney+. Netflix disclosed a revenue increase of +31% YOY. In total, the service added 8.8 million subscribers – the majority, 8.33 of these, in international markets. Netflix continues to report a negative cashflow, but CEO Reed Hastings asserted that the company is slowly approaching a positive cash flow, repeating that cash burn peaked in 2019.

Newly appointed CEO of Google´s parent company Alphabet, Sundar Pichai, presented the Q4 results with an unexpected twist. For the first time since Google bought YouTube in 2006, Google disclosed how much of its revenue is made up by YouTube-hosted ads.

Google stated that during 2019, YouTube generated $15 billion (+36% YOY) in ad revenue, representing 10% of Google´s total revenue. Comparably, YouTube´s ad-business is nearly one fifth the size of Facebook´s and six times larger than predicted ad-revenue for Amazon-owned Twitch. Google further disclosed that YouTube´s Premium and Music Premium offerings hold more than 20 million subscribers, in addition to 2 million subscribers on its paid TV service. In the Nordics, YouTube´s daily reach amounts to 27% according to Mediavision’s figures, indicating that 5.3 million individuals (15-74 y/o) watch content on YouTube during an average day.

Industry News

Disney revealed that its streaming service Disney+ has amassed 28.6 million subscribers since launching in Nov. One third of these subs are assumed to come from the deal between Verizon and Disney, granting one year of free access to Disney+ for selected Verizon customers.

This week, Tele2 launched its new standalone streaming service Com Hem Play+ in Sweden. The service is said to enable the company to reach consumers that are not yet subscribing to any traditional pay TV offerings.

In the Q4 earnings report from AT&T, the company reported forgone revenue of $1.2 billion, due to lost licensing revenue related to the launch of its upcoming streaming service HBO Max. For example, Friends and Big Bang Theory will be streamed exclusively on HBO Max.
In addition to becoming a co-owner, NENT has acquired the exclusive Nordic media rights to the Danish FIFA-tournament eSuperliga. The tournament has been arranged for four years and is one of the largest FIFA-tournaments in the world, in number of viewers.
In a three-year deal, Com Hem consumers are granted access to Nordisk Film´s streaming service Nordisk Film+ in addition to early access to the 50+ movies distributed by Nordisk Film in Sweden.
NENT Group and Sony Pictures Television have agreed to extend their current strategic partnership in a new multiyear deal. The deal covers exclusive Nordic first-window homes of latest films and series as well as co-production of six original series for Viaplay.
India has been singled out as a market with huge potential for streaming services. However, when it comes to music giants, such as Spotify and Apple, these have been defeated by local actor Gaana, currently holding 152 million monthly users.

Mediavision Press Releases

Danske operatører har ny rekord i streaming
Stadig flere husstande i Danmark abonnerer på streamingtjenester. Aktuelt drives væksten hovedsageligt af TV-operatørerne, dvs. aktører som Yousee, Stofa og Boxer. Aktuelt køber næsten 15 % af husstandene i Danmark streamingabonnementer via en operatør.

Suomessa katsotaan ennätyspaljon nettivideoita
Nettivideoiden katselussa tehtiin uusi ennätys Suomessa vuonna 2019. Keskimääräisen päivän kuluessa miltei 60% ihmisitä katsoo jonkinlaista nettivideota, mikä tarkoittaa, että Suomessa päivittäiskatselu on nyt samalla tasolla kuin muissa Pohjoismaissa.  
Norske husholdninger har de høyeste utgiftene for TV og strømming i Norden
Strømmetjenestene er veldig populære i Norge, og de fortsetter å vokse. Samtidig befester tradisjonell betal-TV sin sterke posisjon. 

Mediavision in the News

Swedish SVoD household penetration stagnates in Q4
Mediavision said that in the fourth quarter of 2019, the average SVoD household in Sweden subscribed to 1.8 SVoD services. However, annual growth has stagnated for penetration of SVoD-services and daily reach of online viewing as well when compared with Q4 2018.

Industry Events

  • Grammis Galan: February 6th, Stockholm, Sweden
  • Emma Gaala: February 8th, Helsinki, Finland
  • 92nd Academy Awards (The Oscars): February 9th, Los Angeles, US

*Events where Mediavision will be presenting