The Medium
YouTube, FASTs Share Suboptimal Models for Connected TV Growth
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One of the weirdest dynamics about this magic (and weird) market moment is playing out within YouTube and legacy media free-ad-supported-TV services (FAST).
According to Nielsen’s The Gauge for February 2024, Fox’s FAST Tubi is outperforming subscription services Peacock, and Max and Paramount+ across U.S. TVs and connected TVs. The Roku Channel is also outperforming Paramount+. FASTs Tubi, Roku and PlutoTV are all outperforming Apple TV+.
YouTube is also a FAST (though with an ad-free subscription tier) and the dominant FAST in the U.S., according to The Gauge. It is increasingly relying on its TikTok competitor YouTube Shorts for growth: Views of YouTube Shorts on connected TVs grew by more than 100% from January to September 2023. It announced in a blog post last week that more than 25% of channels in the YouTube Partner Program (YPP) are earning revenue through Shorts.
There are more than 3,000,000 channels in YPP, so at least 750,000 channels are earning money and somewhere north of 2,000,000 channels are not. Moreover, the channels that *are* earning money only retain 45% of revenue, whereas they retain 55 percent of revenue for long-form videos.
Both FASTs and YouTube are telling the story of video inventory increasingly being discounted by media buyers and the companies themselves. That seems counterintuitive at a time when YouTube dominates and FASTs are growing in popularity over subscription streaming services, and demand for digital ad inventory is growing year-over-year in double digits.
Key Takeaway
YouTube and legacy FASTs seem to be sub-optimally monetizing their connected TV inventory—despite growing consumer and advertiser demand—in large part because their strategic priorities lie elsewhere.
Total words: 900
Total time reading: 4 minutes
YouTube’s Dilemma
YouTube is up 1.4% year-over-year to 9.3% of total TV viewing time across U.S. households. It generated $31.5 billion in 2023. A spokesperson told The Verge that the number of Shorts uploaded on YouTube has grown by 50 percent year over year, now averaging over 70 billion ...