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Investors Still Discounting Google Post YouTube TV Announcement
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Alphabet (GOOGL - Free Report) shares jumped up a point after the announcement of its live TV streaming service, but the movement was more or less in line with the market. The shares lost most of the gains thereafter and remained below the S&P 500, as they have been since the election.
It’s widely believed that Google won’t have as strong a standing with this government as it had with the previous one, but not for lack of trying. Company executives have been visiting the White House, but Google’s very public stand against many of President Trump's sentiments are expected to work against it.
Google’s results had been stellar in 2016. After the customary dip in the first quarter, both revenue and earnings rose consistently through the year, pulling share prices along... that is, until the election.
Revenue strength has come from both the search business as well as new areas including hardware, Play and cloud. Management said on the last call that there was "tremendous potential” in these areas and enthused over “continued development of non-advertising revenue streams for YouTube.”
In that they were probably referring at least in part to YouTube TV, an expansion of the Google service that is better known for letting you watch thousands of hours of video from a seemingly endless stock.
Details
The company has joined with all four major broadcast networks (CBS, ABC, NBC and Fox), so a family of six can stream live content from 40+ channels at $35 a month. The company will maintain separate accounts for each member although only three can stream at a time.
The price indicates that YouTube is probably still in negotiations to add more channels in the few months until it launches in important U.S. cities like New York, Los Angeles, Chicago and Philadelphia. The company plans to expand gradually to other U.S. cities. International expansion plans weren’t mentioned.
Also, as far as channels are concerned, there are some important exclusions: HBO, CNN, PBS, the Cartoon Network, TNT, or Viacom channels such as Comedy Central, MTV and VH1, Nickelodeon, Scripps’ Food Network and Home and Garden TV.
But Google does offer you all the goodness of YouTube (and that includes YouTube Red for original content, if you are a subscriber). The YouTube TV app for Android/iOS also allows you to stream whatever you’re viewing to Chromecast, so you can make use of the larger TV screen (built-in Chromecast TVs will also do the job). At some future date (the demo failed during this announcement), Google hopes that you will be able to tell your devices via Google Home or Cast to turn on what you want to see.
The best part? It gives you a real DVR experience by allowing you to store an unlimited number of your recordings for up to nine months, quite unheard-of amongst its competitors like DirecTV Now, PlayStation Vue and Sling TV. The Vue allows you to save shows from some channels for up to 28 days while Sling TV is still testing a service that will allow you to save up to 100 hours of recordings.
Is It a Good Deal?
That depends.
If you’re into traditional TV, you would be spending $80-100 on it, while making do with long-term contracts. YouTube TV is a good deal that way because it comes for just $35, no strings attached while also allowing you mobility. Then again, if you like all the content that’s still exclusive to PayTV, you may want to stick with your current subscription.
If you’re more of a netizen, you’re already familiar with the “skinny bundle” concept, wherein the most-watched/popular channels are served at a lower price. So you’d relate to YouTube TV as well and compare with other similar services as ArsTechnica did-
Either way, there’s plenty of choice.
So YouTube, which still focuses on user experience more than profits and has the resources to go for the best content, may be more capable of delivering the superior experience.
What’s In It for Google/YouTube?
YouTube has for long been the go-to destination for online video consumption although Amazon (AMZN - Free Report) , Netflix (NFLX - Free Report) , Sony , Apple (AAPL - Free Report) and others also have their own thing. Now that it is getting into live TV streaming, it’s also pitted against traditional operators like AT&T (T - Free Report) with its DirecTV Now, DISH Networks with its Sling TV and CBS with its All Access that are also turning to the Internet to protect their revenues. The market is very crowded, so prices are under pressure.
But if data from GfK is to be relied upon, the portion of American homes subscribing to a Pay TV service has shrunk to 75% with a much smaller 6% using Apple TV-like devices to stream shows to a TV. Moreover, the number of TVs per home is declining while the number of homes without a TV is on the rise (U.S Energy Information Administration survey). According to Morningstar, Pay TV executives estimate that 10 million homes subscribe to broadband only and not TV.
eMarketer estimates that YouTube’s 180 million viewers generated $3 billion last year and Google recently announced that it surpassed a billion hours of daily viewership. TV ads reportedly generate $70 billion in revenues annually, so there’s a fair chance that as consumer preference continues shifting to online channels, YouTube TV will allow Google to take its share of those dollars.
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Investors Still Discounting Google Post YouTube TV Announcement
Alphabet (GOOGL - Free Report) shares jumped up a point after the announcement of its live TV streaming service, but the movement was more or less in line with the market. The shares lost most of the gains thereafter and remained below the S&P 500, as they have been since the election.
It’s widely believed that Google won’t have as strong a standing with this government as it had with the previous one, but not for lack of trying. Company executives have been visiting the White House, but Google’s very public stand against many of President Trump's sentiments are expected to work against it.
Google’s results had been stellar in 2016. After the customary dip in the first quarter, both revenue and earnings rose consistently through the year, pulling share prices along... that is, until the election.
Revenue strength has come from both the search business as well as new areas including hardware, Play and cloud. Management said on the last call that there was "tremendous potential” in these areas and enthused over “continued development of non-advertising revenue streams for YouTube.”
In that they were probably referring at least in part to YouTube TV, an expansion of the Google service that is better known for letting you watch thousands of hours of video from a seemingly endless stock.
Details
The company has joined with all four major broadcast networks (CBS, ABC, NBC and Fox), so a family of six can stream live content from 40+ channels at $35 a month. The company will maintain separate accounts for each member although only three can stream at a time.
The price indicates that YouTube is probably still in negotiations to add more channels in the few months until it launches in important U.S. cities like New York, Los Angeles, Chicago and Philadelphia. The company plans to expand gradually to other U.S. cities. International expansion plans weren’t mentioned.
Also, as far as channels are concerned, there are some important exclusions: HBO, CNN, PBS, the Cartoon Network, TNT, or Viacom channels such as Comedy Central, MTV and VH1, Nickelodeon, Scripps’ Food Network and Home and Garden TV.
But Google does offer you all the goodness of YouTube (and that includes YouTube Red for original content, if you are a subscriber). The YouTube TV app for Android/iOS also allows you to stream whatever you’re viewing to Chromecast, so you can make use of the larger TV screen (built-in Chromecast TVs will also do the job). At some future date (the demo failed during this announcement), Google hopes that you will be able to tell your devices via Google Home or Cast to turn on what you want to see.
The best part? It gives you a real DVR experience by allowing you to store an unlimited number of your recordings for up to nine months, quite unheard-of amongst its competitors like DirecTV Now, PlayStation Vue and Sling TV. The Vue allows you to save shows from some channels for up to 28 days while Sling TV is still testing a service that will allow you to save up to 100 hours of recordings.
Is It a Good Deal?
That depends.
If you’re into traditional TV, you would be spending $80-100 on it, while making do with long-term contracts. YouTube TV is a good deal that way because it comes for just $35, no strings attached while also allowing you mobility. Then again, if you like all the content that’s still exclusive to PayTV, you may want to stick with your current subscription.
If you’re more of a netizen, you’re already familiar with the “skinny bundle” concept, wherein the most-watched/popular channels are served at a lower price. So you’d relate to YouTube TV as well and compare with other similar services as ArsTechnica did-
Either way, there’s plenty of choice.
So YouTube, which still focuses on user experience more than profits and has the resources to go for the best content, may be more capable of delivering the superior experience.
What’s In It for Google/YouTube?
YouTube has for long been the go-to destination for online video consumption although Amazon (AMZN - Free Report) , Netflix (NFLX - Free Report) , Sony , Apple (AAPL - Free Report) and others also have their own thing. Now that it is getting into live TV streaming, it’s also pitted against traditional operators like AT&T (T - Free Report) with its DirecTV Now, DISH Networks with its Sling TV and CBS with its All Access that are also turning to the Internet to protect their revenues. The market is very crowded, so prices are under pressure.
But if data from GfK is to be relied upon, the portion of American homes subscribing to a Pay TV service has shrunk to 75% with a much smaller 6% using Apple TV-like devices to stream shows to a TV. Moreover, the number of TVs per home is declining while the number of homes without a TV is on the rise (U.S Energy Information Administration survey). According to Morningstar, Pay TV executives estimate that 10 million homes subscribe to broadband only and not TV.
eMarketer estimates that YouTube’s 180 million viewers generated $3 billion last year and Google recently announced that it surpassed a billion hours of daily viewership. TV ads reportedly generate $70 billion in revenues annually, so there’s a fair chance that as consumer preference continues shifting to online channels, YouTube TV will allow Google to take its share of those dollars.