YouTube is the most popular television channel in the US today. It is draining billions of dollars in ad revenue from premium TV providers and growing bigger with each passing day. So, why is Hollywood ignoring it?
YouTube is the biggest source of TV in the US
I see a lot of data about what and how people watch television, and pretty much everything I see agrees on one fact: YouTube has become one of the US's most important television entertainment providers. Nielsen says that YouTube (not including YouTube TV) was responsible for 9.9% of TV viewing time in April 2024. eMarketer says there are 254 million over-the-top video service users in the US, and 96% of them use YouTube. And YouTube claims that 150 million people in the US watch YouTube and YouTube TV on TV (about 130 million excluding YouTube TV).
To put YouTube’s success on TV into perspective, consider that Netflix reaches about 60 million more people on TV than YouTube. However, it delivered 17% fewer viewing minutes in the first half of 2024. The social video giant also delivered almost twice as much viewing time as Disney’s direct-to-consumer services -Hulu, Disney+, and ESPN+- combined. Moreover, if you add all the time people spend watching Disney’s TV properties across cable, broadcast, and streaming, it delivered 11.4% of TV viewing minutes in April versus YouTube’s 9.7%.
By any measure, YouTube has become a monster on TV, and it continues to grow. Between June 2023 and June 2024, YouTube’s share of monthly TV time grew from 8.8% to 9.9%. Over the same period, Netflix showed a tiny gain (0.2%) while Hulu, Amazon, Disney+, Max, and Peacock saw their share or shrink. Broadcast and cable also saw their share slide from 51.4% to 47.7%.
Hollywood is losing big to YouTube
There is a tendency to gloss over YouTube's impact on Hollywood. After all, tens of billions in traditional TV ad revenue and license fees are still rolling in, though they are shrinking a little faster these days. However, YouTube’s impact is perhaps best illustrated by looking at lost opportunities.
eMarketer forecasts that US traditional linear TV ad spending will be about $60 billion in 2024, roughly the same as in 2023. But it could be much higher. Ten years ago, YouTube was not a factor on TV. The time people now spend watching it on CTV today was spent watching broadcasts and cable back then. Since YouTube delivers 10% of TV viewing, the industry would earn $6 billion more in ad revenue if viewers still spent that time with traditional TV.
Now that all the top SVODs depend at least partially on advertising, they are in direct competition with YouTube for ad spending and viewing time. Yet even Netflix doesn’t take the competition seriously. Ted Sarandos, Netflix Co-CEO, was asked about YouTube competition in the Q2 2024 earnings call and had this to say:
“What we are focused on here is focusing ourselves on that other 80% of total TV time that isn’t going to either us or YouTube.”
What can we conclude from all this data? Hollywood and all major “premium TV” distribution outlets are losing badly to YouTube. Moreover, most don’t perceive the service as a threat and, therefore, do not talk about what to do about it. Perhaps the lack of action is because the root of YouTube’s success is so different from the premium TV model.
YouTube’s model is fundamentally different from premium TV
Ampere Analysis recently published interesting data comparing the amount top premium content providers spend on original and acquired content. The analysis showed that only Disney will spend more than YouTube in 2024. Although Ampere pointed out that the content investment differed from Hollywood, the equivalency in the analysis obscures how fundamentally different YouTube’s content model is.
Comparing YouTube’s content investment with Hollywood’s content spend is like comparing chalk and cheese; the two look superficially alike but are completely different underneath. Disney and Netflix’s content spending is full of risk. The companies fund the creation of the content, and if the content is no good, they lose their investment. On the other hand, YouTube invites everyone to create content, and the amount creators receive scales with the popularity of the videos produced. In other words, YouTube doesn’t spend anything on content; the content funds itself with ads based on its success.
However, the Ampere data helps emphasize the power of the YouTube model. The company will enable almost $20 billion flowing into the creator economy globally in 2024. Top creators can earn a good living delivering content on the site. Moreover, many creators are so focused on the television screen that they consider themselves independent TV producers. According to Good Mythical Morning Co-host Link Neal:
“We’re not making user-generated content. We’re making independent television.”
YouTube asks the question Hollywood dare not. What if you turned television production over to the people and let them decide what they want to watch? The answer is you get the most popular channel/brand on television, one that steals more viewing time from Hollywood’s TV efforts with every passing day.
Colin Dixon is analyst, consultant and founder of nScreenMedia. Dixon created nScreenMedia as a resource to the digital media industry as it transitions to the new infrastructure for multi-screen delivery. He brings a wealth of knowledge on digital TV, over-the-top, and IPTV markets garnered from his 20+ years working in those industries. Before founding nScreenMedia, he spent seven years as an analyst and partner with The Diffusion Group. Previously he held senior executive positions at Microsoft/WebTV, Liberate, and Oracle, delivering products and services to the cable, satellite, and IPTV industries.
Dixon is the author of many reports, opinion pieces, and classes, including Getting to Grips with FAST: a Primer on Free Ad-Supported Streaming TV. He holds bachelor's and master's degrees in electrical engineering and has post-graduate business education experience from Stanford.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by StreamTV Insider staff. They do not represent the opinions of StreamTV Insider.