[Author's Note: The two final mailings are going to be Lessons of 2021 (Monday) and Predictions for 2022 (Tuesday or Wednesday).
Predictions will aim to offer a thoughtful take on the moving pieces of the post-"streaming wars" marketplace after 2021, and how they will play out in 2022.
Predictions will be exclusive to Members, only.
I built a presentation of lessons and predictions last year, and plan to do so again. Because more themes and frameworks have organically emerged over the past 12 months, I will build it out differently.]
In Wednesday's Member Mailing, What YouTube's Transparency Reveals for 2022 & Beyond, I concluded:
...YouTube's transparency and growing creator economy suggest that it is also an emerging roadblock for the success of all streaming services, including Netflix. Meaning, the problem of transparency is that YouTube's creator economy stories are already better than most streaming services, and seem poised to improve in 2022 and beyond.
I think investors and the broader streaming marketplace have yet to comprehend this, too.
Given we are likely to see more MrBeast-type successes on YouTube in 2022, my guess is that will change.
There were three data points I neglected to include in that Member Mailing.
First, I should have included Nielsen's The Gauge, which provides "a monthly macroanalysis of how consumers are accessing content across key television delivery platforms, including Broadcast, Streaming, Cable and Other sources."
Since it launched back in June 2021, while other delivery platforms have gained or lost a percentage point each month, YouTube has consistently and invariably had a share of 6% of all consumer behavior.
YouTube has shared that in December 2020, over 120MM U.S. viewers streamed YouTube and YouTube TV on their TVs, and management has used that as a key data point throughout 2021.
With Nielsen estimating 121MM homes with TV and 120MM homes with broadband, the implication is that YouTube saw almost 100% engagement on U.S. TVs in December, and Nielsen suggests it has seen a fraction of that since.
Of course, that's an apples to oranges comparison of two opaque data sources, one of which is self-promoting (YouTube). So, there are no real takeaways from this comparison.
That said, YouTube's presence in streaming in the U.S. is sizable and consistent. At almost neck-and-neck with Netflix, and consumed on TV in nearly 50% more homes than Netflix's 65MM U.S. homes, YouTube is a competitive force to be reckoned with for Netflix and other streamers.
I also neglected to include YouTube Premium and Music.
YouTube Music Premium costs $9.99 a month and lets users listen to and download ad-free music. YouTube Premium goes for $11.99 a month and gives subscribers access to all of the benefits of YouTube Music, with the ability to also download and watch regular videos ad-free.
YouTube announced in September that its Premium and Music subscriber base reached 50MM subscribers worldwide, up from 30MM in 2020.
Google did not offer much additional detail on 50MM, so we don’t really know how many people are subscribed to YouTube Music or Premium, or as The Verge noted, "how many [of the 50MM] are using the services’ free one-month trial".
The implication in the announcement is the subscriber base has grown largely overseas and because of music:
The unique offerings of YouTube Music and Premium are resonating in established and emerging music markets alike. We’re seeing impressive growth in countries like Korea, India, Japan, Russia and Brazil where music is a top passion
That statistic seems to imply two things in relation to YouTube becoming an emerging roadblock in streaming.
First, at $11.99, YouTube Premium's pricing faces competition from lower-priced streamers. So, it's probably a niche use case, at best.
That said, with 120MM homes streaming YouTube and YouTube TV on their TVs, even if 1% of those households has Premium, that is 1.2MM homes.
1.2MM is 10%-15% of the subscription bases of AMC Networks, Showtime, Paramount+ (U.S. est.) and Starz. That would translate into real revenue and subscriber growth for those services.
Second, YouTube Premium is an aggregator 2.0 bundle of Music and ad-free streaming.
That is a tactical advantage that has seen real traction in the marketplace over 2021, as Verizon CEO Hans Vestberg told the virtual UBS Global Technology, Media and Telecom Conference earlier this month:
“We are positively surprised about the stickiness and how customers have stayed with the services and the retention,” including when rolling them over to paying service, Hans Vestberg told the virtual UBS Global Technology, Media and Telecom Conference.
“We are very happy with that model and there is probably more to be done there,” he reiterated. “We now have streaming services, we have gaming services, we have music services, and let’s see what we can do more.” He added that these bundles were “a key differentiator from anyone that is in the market” that provides customers “more value, more optionality.”
Streamers seeking to convert users on streaming, alone, increasingly need to offer more than streaming, alone.
Last, there's the adage "faster, cheaper, better... pick two".
With a $3.5MM budget, MrBeast pulled off faster and better than most streaming services, but on a per episode budget well above most productions.
Assuming 2MM creators in YouTube's Partner Program globally, and assuming MrBeast's model puts him in anywhere between 0.1% and 1% of all creators, that is 2,000 to 20,000 creators now workings towards figuring out how to produce content faster and better than legacy media and Hollywood studios.
Assuming they produced at MrBeast's pace of 25 videos or two videos per month (2021, alone), that is about 50,000 videos to 500,000 videos on a free platform against which legacy media streamers will need to compete.
Compare this to Starz, which was celebrating shifting from three streaming series releases per year to monthly releases, and Starz falls short. The same is true for AMC Networks, which is seeking to boost its library of originals, but only marginally, according to CEO Matt Blank:
Blank credited [former CEO Josh] Sapan and his team with focusing AMC’s content of the future on distinct verticals with fervent fan bases, like horror, fantasy, Black audiences and British drama buffs. AMC can’t afford to spend tens of billions of dollars on content like its larger rivals, but in Blank’s view, it doesn’t have to.
“We’re not trying to play the game that all the other big players are playing,” Blank said. “We’ve got a targeted business with a lower cost structure and a more loyal customer base. It gives us an opportunity to curate a product directly for the needs of those users.”
This reads like MrBeast's model but with more overhead.
If AMC Networks or any other legacy media streamer aiming for growth isn't concerned for a broader market of competition from YouTube Creators after MrBeast's Squid Game success, all signs suggest they should be.