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Home Internet

YouTube TV has 5 million subscribers and appears to be the future of cable

by sam
July 21, 2022
in Internet
0
YouTube TV has 5 million subscribers and appears to be the future of cable

When YouTube chose to build a cable TV-like product in 2014, one of its primary goals was to improve its relationship with Hollywood. After seven years of battling Viacom over widespread copyright infringement, YouTube CEO Susan Wojcicki desired a way to work with networks and studios rather than against them.
She hired Christian Oestlien, now YouTube’s VP of product management, and gave him a broad mandate: “figure out what YouTube power be able to do with the most larger media companies, with a focus on television.”

YouTube TV crashed seven years later, the top company’s live cable streaming bundle. The company reported today that 5 million people are paying for or testing out YouTube TV, which isn’t the same as 5 million subscribers but is still fantastic. According to Variety, it has gained 2 million subscribers since mid-2020, even as the number of cable subscribers in the United States continues to decline — down to 46.2 million in the first quarter of this year. Comcast, the most significant player in US cable, reported 17.6 million subscribers in the first quarter of this year, a decrease of nearly two million from the previous year.

Meanwhile, internet-cable options have been hit-or-miss. With roughly 4.1 million subscribers, Hulu with Live TV is growing nicely, while Fubo, Sling, and others have mostly failed to catch on. With five million subscribers, YouTube TV is a small but significant player in the TV market.

Of course, these sculptures pale in comparison to Netflix’s 220 million+ subscribers or the 130 million or so who pay for Disney Plus. And, when on-demand streaming appears to be on the rise, it’s easy to wonder how long YouTube TV’s “cable but better” strategy can work. Oestlien says, “A while.” Live TV may be on its way out, but it will take some time. And there’s always money to be made: “TV, for all of its flaws, is still a profitable business for our partners,” Oestlien says.

Sports, which continue to be the most profitable thing happening in the TV world, are the primary reason for the existence of YouTube TV. The truth is that YouTube TV exists primarily because of sports, which continue to be the most profitable thing in the TV world — far too lucrative to become a fully streaming entity. “Most of the great sports programming is still within the bundle,” Oestlien says, referring to local broadcast channels and regional networks.

These are still the primary reasons people subscribe to YouTube TV or its competitors. It’s the cable bundle, but with a better app, more DVR storage, and the ability to cancel anytime. “It’s a sports bundle with a few compelling networks thrown in to round it out and make it something the complete family can enjoy.”

Okay, but won’t sports eventually migrate to streaming?

Leagues such as the NFL and MLB are already selling rights to companies such as Amazon and Apple, and Disney appears to be betting big on ESPN’s digital future. Oestlien agrees but says it will make YouTube TV even more helpful. He says that turning on the game has become far more difficult as more leagues sign up for streaming services or even build their own. Also, it’s pricey. “You simply have to consider the pricing strategy that would need to be implemented there,” Oestlien says. “To make it all work, you end up in a situation where a bundle makes a lot of sense.”

Furthermore, as those rights become more expensive, he believes leagues and networks will welcome a company with deep pockets peeking to get in on the action. YouTube has had its share of carriage battles over the years, but networks appear to need YouTube TV as much as the platform does.

The real bet YouTube TV is driving is that the bundle will not die with cable. We’ve gone through several generations of unbundling, dividing content from a single source into dozens. This has made in lower prices and increased great content, but it has also made discovery more difficult and account management more complicated — and it’s not always clear how much money you’re saving. Oestlien and YouTube believe that someone should build a better one rather than permanently breaking the bundle. “The real bet YouTube TV is creating is that the bundle will not die with cable.”

There’s even a possibility that Oestlien believes YouTube TV will re-bundle the streaming services, bringing Peacock and Paramount Plus back together like CBS and NBC used to be in the TV Guide. Right now, that appears to be a pipe dream: streaming services are desperate to keep users within their content universes rather than cooperating.

Netflix and others have even resisted inclusion in universal search tools, claiming that it is preferable to open the Netflix app to find something rather than searching for it on Justwatch. However, as those services proliferate, many may have a reason to seek out a company with stable distribution — and deep pockets.

By the way, YouTube isn’t the only company on this path. Apple and Amazon have both succeeded in allowing users to subscribe to HBO, Starz, and other services through their platforms; HBO, for example, is reportedly about to return to Amazon Channels after abandoning the service and losing its 5 million subscribers.
You can now sign up for HBO Max and access its content through the YouTube TV app. However, most services have chosen not to participate in these catch-all systems thus far.

The bundle is critical not only for YouTube TV but for YouTube in general. If current streaming trends continue, they could threaten everything YouTube does. What if Carpool Karaoke was just available on Peacock and John Oliver’s latest epic rant was available on HBO Max? What if music videos were only available on Spotify and Apple Music?

Of course, YouTube has a desperate amount of original content, but TikTok, Instagram, and others are working hard to change that. YouTube’s role as the internet’s biggest distributor of other people’s videos is a massive part of the success platform, and a push toward more control and streaming could change that over time.

That’s why, after speaking with Oestlien, I get the sense that YouTube TV is still, in part, a tool for making friends with content providers. Oestlien also oversees YouTube’s related TV business, which suggests he helps broker deals to bring all kinds of TV content to the standard YouTube platform. He appears unconcerned about losing content access. “We have 2 billion users worldwide,” he says. “So, whether the content is distributed in a bundle or we explore other ways of distributing it over time, I think YouTube can be a great partner there.” Even in sports, he says, YouTube is making deals to stream games on YouTube TV and use league content in various other places across the platform.

YouTube TV feels like a hit and a hedge after five years. But the truth is that a radically different future of television is still a long way off. There is far too much money invested in maintaining the status quo, particularly in sports. “Cable but better” may not always be the best idea in television, but it’s working well now.

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