YouTube: Alphabet’s Powerful Social Media Presence

In October 2006, YouTube was bought by Google (which later became Alphabet) for $1.65 billion.

YouTube is Alphabet’s answer to Facebook that now commands the attention of 2.291 billion active users. This is not too far off from Facebook’s 2.74 billion active users).

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Youtube: a Prized Revenue Stream

The purchase of YouTube has been a tremendous long-term revenue-generating asset for Alphabet. It now contributes nearly 11% to its overall revenue.

The reported revenue for Alphabet Inc in Q1 2023 was $69,787, slightly up 2.61% from the corresponding quarter the previous year when it reported $68,011 million in revenue.

“Resilience in Search and momentum in Cloud resulted in Q1 consolidated revenues of $69.8 billion, up 3% year over year, or up 6% in constant currency. We remain committed to delivering long-term growth and creating capacity to invest in our most compelling growth areas by re-engineering our cost base.”[1]

Ruth Porat, CFO, Alphabet and Google

Expanding Alphabet’s Business Model

YouTube’s addition to Google’s (Alphabet’s) portfolio expanded the company’s business model – from a mere search engine to hosting video content.

YT allowed adding revenue generation stream from advertisements in addition to offering paid content by 3rd parties. In 2020 alone, YouTube’s yearly revenues from advertising raked in nearly $20 billion. A massive jump from just over $8 billion in 2017.

Billions of Videos Served

Some estimates put the latest number of videos hosted on YouTube at tens of billions. According to Britannica, the number of videos available in March 2006, the year of Alphabet’s purchase, stood at just 25 million. But YouTube is not stopping there: it has launched YouTube music service, recently passing the 50-million threshold of paying subscribers.

Prepared by Syam KP, analyst of Gulfbrokers

* Past performance is no guarantee of future results

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.