Ads remain YouTube’s primary revenue source

YouTube’s revenue is valued at $40 billion over the last twelve months. According to AlliacneBernstein, the asset management firm, YouTube’s last four quarters of ad revenue was $29 billion, which puts its subscriptions revenue at $11 billion. That’s roughly a third of the $31.5 billion in streaming revenue Netflix generated in 2022.

YouTube chief Neal Mohan has stated that while YouTube has shown keen investment in subscription products recently, ads will continue to be its primary revenue source. His opinion was expressed at the SVB MoffettNathanson’s Technology, Media, and Telecom conference Thursday in New York City. 

It hasn’t all been smooth sailing for the video platform. YouTube’s ad revenue had declined for three consecutive quarters, dipping 2.6% to $6.7 billion in the last quarter. Nevertheless, Mohan said that the macroeconomic conditions that had caused advertisers to pull spend have stabilised. “We’ve seen growth in things like travel and retail, which has been balanced by a slowdown in finance, media, and entertainment,” Mohan said.

Furthermore, during YouTube’s upfront at an annual upfronts event where media companies make their pitch for big ad commitments which it calls a “Brandcast,” it introduced an unskippable 30-second ad for people watching on connected TVs as well as ads that show up when content is paused.

During the SVB MoffettNathanson conference, Mohan leaned into how YouTube would diversify its video offerings across all areas, from premium content meant to be viewed in the living room — like the subscription-driven NFL Sunday Ticket— to creator-owned video. 

“We really want to be the platform for all things video,” he said. YouTube viewed in the living room on TV screens is a focal point because it’s growing quickly. At the same time, YouTube wanted to offer a large variety of ad opportunities to its creators. “Some are great at 15 second Shorts, others grew up on longform, so that’s traditional 15-minute video-on-demand. Some gamers will do hours-long live streams. Everything from 15-second Shorts to hours-long live streams is our focus.”

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