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Has YouTube Started to Replace Traditional TV Viewing?

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User engagement on YouTube continues to increase

In the previous part of this series, we discussed the growth drivers behind increasing YouTube’s significance for Google (GOOG). We discussed a number of YouTube’s metrics that have grown fast. Another interesting insight that Google shared with its investors and analysts in its 2Q15 earnings conference call was that YouTube now reaches more 18-to-49 year-olds on mobile devices alone in the United States than any US cable network.

According to Google, the mobile viewing time per user on YouTube is now 40 minutes per day, which has risen by 50% on a year-over-year basis. Plus, the number of users who start at the YouTube home page has gone up three times over the last year.

These revelations strengthen reinforce the cord-cutting phenomenon in which pay-TV providers like Comcast (CMCSA) and Time Warner Cable (TWC) are losing subscribers to video online streaming companies.

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YouTube leads mobile internet traffic in North America

According to a report from Sandvine and as the chart above shows, YouTube accounted for 21% of mobile downstream Internet traffic in North America as of March 2015. YouTube leads this market, but social media players such as Facebook (FB), Snapchat, and Instagram are closing the gap with YouTube. Netflix (NFLX) is ranked ninth in this segment. Pandora (P) Radio also claims a spot in the top ten players in this market—mainly because of its popular music streaming service.

You can get exposure to Facebook by investing in the Technology Select Sector SPDR (XLK), which has 4.5% exposure to the company.

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