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  • YouTube TV Looks Poised for Strong Growth in 2018

    YouTube TV, which launched less than a year ago and ended 2017 with around 300K subscribers, looks poised for strong growth in 2018. YouTube TV entered the crowded vMVPD or “skinny bundle” space with competitors Sling TV, DIrecTV Now, PS Vue, Hulu With Live TV and fuboTV. YouTube TV expanded from 5 initial markets to over 80 by the end of 2017, with plans to expand to over 100 soon, which it believes will cover 85% of the U.S. households.

    It’s always hard to tell just how serious Google is about any new initiative given its massive resources and willingness to experiment and quickly shut something down. But YouTube TV is showing signs of being a serious initiative, not only because of its rapid expansion. Last fall, YouTube TV really hit my radar when it served as the presenting sponsor of the World Series, a deal which must have easily run into the 7 figures or more, raising huge new awareness and starting the redefinition of what the YouTube brand stands for.

    As significant, YouTube TV has invested more than any other skinny bundle to include local broadcasters in its lineup. VideoNuze readers know I’ve been skeptical about the prospects for skinny bundles because they lacked critical TV networks, starting with broadcasters, which are still huge draws, despite ongoing viewer fragmentation. Just yesterday, TDG’s research showed that 37% of new skinny bundle subscribers churned out due to lack of broadcast networks, second only to technical issues (41%).

    YouTube TV’s broadcast coverage is now a clear differentiator for it vs. the competition (although it still lacks PBS, which is an obvious hole).  Beyond the broadcasters, YouTube TV has also inked deals for all of the most popular cable TV networks, except those from Scripps, Discovery and Viacom. On YouTube TV, you’ll find ESPN, CNN, Fox News, AMC, Disney Channel, USA and many others, including, importantly, regional sports networks.

    Late last week I signed up for YouTube TV, and after spending a bunch of time with it since, I’m quite impressed with the overall user experience on Roku, iPhone, iPad and desktop (Chrome only). Picture quality, search and graphics are all strong. Particularly noteworthy is how quick channel changing is, especially on TV; you’ll forget you’re actually watching over the Internet. The grid guide actually shows you thumbnails and video of what’s on right now. Select a channel and it’s playing within a couple of seconds.

    The DVR functionality is fine, although it lacks some advanced features found on TiVo and Comcast X1 such as adjusting recording length. There’s also a weird nit that if a recorded show is also available on-demand, ads can’t be skipped, a commonly-used DVR feature. But YouTube’s DVR is unlimited and carries no extra cost, additional differentiators vs. the competition.  

    Even at the new rate of $40/month, YouTube TV is likely operating somewhere between a small loss and breakeven given programming, delivery and other operational costs (and that’s before all the marketing/promotion). But my hunch is that Google sees YouTube TV as its best shot of getting into the TV business, and importantly, gaining access to TV ad inventory. As I’ve suggested in the past, how long will it be before YouTube TV approaches some of the included TV networks and asks to sell some of its ads, promising the upside of higher rates by tapping user data from other Google services for better targeting?

    For cord-cutters and cord-nevers, YouTube TV presents a compelling, modern approach to pay-TV. As with other skinny bundles, there’s no set-top box, contracts or hidden fees. But YouTube is still acknowledging and improving on some of pay-TV’s strengths: a robust channel lineup, including all broadcasters and most popular cable networks, multi-user access and solid DVR capability. With a strong service, a well-funded marketing budget and accelerating word-of-mouth references, YouTube TV looks like it will gain significant momentum in 2018.

     
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