YouTube has become one of the biggest pay-TV services in the US
- Google has been trying to crack the TV market forever.
- It figured it out. Instead of acting like a tech company, it sells TV like a regular cable company.
Google has been trying to break into TV for close to two decades. It's here now: Its YouTube TV offering has become one of the biggest pay-TV services in the US.
YouTube TV — which, like conventional pay TV, sells a bundle of dozens of channels — now has "more than 8 million" subscribers, YouTube CEO Neal Mohan announced Tuesday morning. That makes YouTube the fourth-largest pay-TV service in the country, behind Charter and Comcast (14.1 million each) and DirecTV, at about 11 million.
YouTube last disclosed subscriber numbers in 2022, when YouTube TV had 5 million customers. It likely got a meaningful boost last fall when it started selling the NFL's Sunday Ticket service as an add-on to its basic package of TV channels.
YouTube's ascent into the mainstream of pay TV represents a couple of things.
For starters, it shows you that YouTube and its owner, Google, have been persistent and patient about trying to crack TV, and its enormous twin revenue streams: subscriptions and ads.
Google first tried getting into the TV-ad business back in 2007, and later tried to build its own TV operating system, which still exists in varying forms. Because Google was Google — Silicon Valley engineers who looked at the existing TV ecosystem and saw a ton of waste and outmoded business models — it didn't want to just sell a bundle of TV channels.
But Google could never figure out how to crack TV ads on its own, and its TV operating systems didn't set the world on fire. So eventually, in 2017, it decided to sell a bundle of TV channels, just like the other guys. Since then, it has steadily grown.
Now comes the other part of the equation: As YouTube TV has grown, conventional pay TV has shrunk. That's partly because multiple generations of video watchers have either cut the cord or never got one in the first place. And it's partly because some pay-TV providers — such as Comcast — have stopped trying to persuade customers to keep or get pay TV.
Instead, they're happy if those customers simply pay them for broadband — a high-margin business that everyone needs to pay for, regardless of whether they get pay TV.
Which gets us to one final question: If conventional pay TV is a shrinking business, is it a good idea for Google to keep trying to expand?
The answer, according to Google, seems to be yes — again, see its $2 billion-a-year deal to sell NFL games. Presumably because there's still a world of 70 million-ish people who pay for TV, and Google would rather have more of it than less. On the other hand: If YouTube TV were a really good business for Google, the company might tell investors just how good it is. And so far, it hasn't.