YouTube is rebranding and expanding its YouTube Premium subscription service and other measures in order to raise revenue.
The Google-owned service is diversifying its business model to address rising competition in the advertising market.
This is according to the latest analysis from IHS Markit, which expects the current markets for YouTube Premium, excluding the music-only tier, to generate revenue of nearly $2 billion in 2022.
Revenue generated by YouTube Premium in 2022 equates to 7 per cent of the $27 billion the company is expected to make worldwide from advertising. Nearly three-quarters (73 per cent) of YouTube Premium subscription revenue will come from the US, followed by Europe with 13 per cent, Asia-Pacific with 6 per cent, and Mexico and Canada making up the remaining 9 per cent.
According to IHS Markit, YouTube’s competition is increasingly coming from specialist platforms such as Twitch, Instagram and Apple iTunes. Content monetisation methods outside of advertising will help YouTube deliver higher revenues to its content producers, keeping them loyal to the platform and by extension, their audiences. Examples of these methods include paid individual channel subscriptions, an integrated merchandise store and the recently expanded and rebranded YouTube Premium subscription.
“To date, online video advertising growth has been fuelled by the movement of advertising budgets, particularly from traditional TV – a rising tide that has lifted all the major platforms,” said Dan Cryan, executive director of digital media, IHS Markit. “At some point, this budget migration will slow, however, and the battle for audiences will be intensified as a battle for ad spending.”
“The YouTube Premium subscription leans into its position as a music platform, to drive uptake and expand its offer,” added Max Signorelli, home entertainment research analyst for IHS Markit, “a well justified move considering the exceptional growth of Spotify and Apple Music subscriptions, which between them gained 3.5 million subscribers per month in the first quarter of this year.”