YouTube touts ‘multi-format’ strategy amid continued ad sales drop

YouTube continued to see ad revenue slide in the first quarter, as Google parent Alphabet reported a 2.6% year-over-year decline on the platform from $6.87 billion to $6.69 billion. At the same time, the company is focusing on a “multi-format strategy” for YouTube, with Shorts and connected TV engagement at the forefront.

YouTube in February expanded its Partner Program to launch a revenue sharing model for Shorts creators, allowing them to receive compensation for their content. Monetization thus far is “progressing nicely,” according to Chief Business Officer Philipp Schindler, who commented people are engaging and converting on Shorts ads “at increasing rates.”

Despite the third consecutive quarter of revenue decline for YouTube ads, CEO Sundar Pichai said Shorts continue to “see strong momentum with creators.” In 2022, the number of channels that were uploaded to Shorts daily rose over 80%, with Pichai adding creators posting weekly “saw the majority of new channel subscribers coming from their Shorts post.”

During Q4 earnings, the company disclosed daily views of Shorts surpassed 50 billion, up from 30 billion at the end of Q1 2022. YouTube is striving to close the gap between Shorts and long form content as well as build up the end user experience, said Schindler.

“We are the only destination where creators can produce all forms of content across multiple formats and screens with multiple ways to make a living,” he added, as CTV is particularly bolstering YouTube viewership and advertising. YouTube has also optimized Shorts to make the video clips viewable on larger TV sets.

Another priority is investing in YouTube’s subscription offerings, the most notable example being the NFL Sunday Ticket. Earlier this month, YouTube disclosed pricing for the sports package, which will be available on vMVPD YouTube TV or a la carte via YouTube Primetime Channels, the platform’s streaming service aggregator.

YouTube is offering consumers a limited-time discount for both options, but Sunday Ticket’s retail price is more expensive than its offering on DirecTV, which previously held the distribution rights since 1994. YouTube in March also increased YouTube TV’s base price by $8 per month.

Google executives didn’t provide an updated subscriber count for YouTube TV, which as of July 2022 had 5 million users. However, Pichai said he expects Sunday Ticket to help drive subscriptions as well as “bring new viewers to YouTube’s paid and ad-supported experiences.”

Ahead of announcing YouTube TV price hikes, YouTube last month rolled out a multiview feature, allowing users to watch up to four different streams at once.

Finally, Schindler highlighted a longer-term effort to make YouTube more shoppable. Although shopping integration is still in “super early days,” he noted more than 100,000 creators, artists and brands have connected stores to their YouTube channels.

“We’re excited about the potential ahead,” added Schindler.

Alphabet in Q1 reported consolidated revenues of $69.8 billion, up 3% year-over-year. Operating income declined 25% to $17.4 billion and net income was $15.1 billion.