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Google To Face Stiff Competition On Video Revenues From The Other 3 FANGs

Summary

Google's YouTube could see ad revenue erosion from Facebook's fast-moving initiatives on video.

YouTube Red is pitting itself against Netflix and Amazon Prime Video, but can it sustain the planned addition rate for new, original programming?

Google's video revenues are now tied closely with market share action. How much will they lose to Facebook versus how much can be gained from Netflix and Amazon?

If you want to summarize what Google (NASDAQ:GOOG) (NASDAQ:GOOGL) as a business is, you just need to explain four things: Google Advertising, Search, YouTube and Android.

If advertising is the dam that collects water for Google, then their catchments are Search, YouTube and Android. Outside of these catchment areas, Google's attempts at creating new ones - so far - has been a huge let-down, like their Motorola dream or Google Plus.

But so far, Search, YouTube and Android have served the company well and, in fact, have positioned the company to take advantage of the global shift toward mobile video consumption. But where there is money involved, it's obviously going to bring competition - and YouTube is starting to face significant threats to its long-term future.

Don't get me wrong - I don't think YouTube is going to go away any time soon. However, the way the market is shaping up, there are two distinct threats to YouTube - one in the form of Facebook (NASDAQ:FB) and the other in the guise of Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN) Prime Video.

Facebook as a Video Player

In my recent article, "Facebook's Future is Video," I talk about why Facebook is pushing hard on the video front and the tremendous growth that the industry has seen in recent years.

In the current scenario, Facebook is still a rookie in the ever growing mobile video world - when you consider the size, scale, reach and timeline of YouTube.

The real lure of mobile video, for Facebook, is the advertising revenue. Sitting, as they are, on a user base numbering billions, they have every reason to get into this business. With WhatsApp still unmonetized and Instagram already piggybacking on FB's ad platform, this is something they sorely need to cement their future.

The loser in this game is going to be YouTube - although it will take time before Facebook Live and other initiatives can catch up to the pioneer of user-generated video...


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