uploads/2015/08/Percentage-of-downstream-internet-traffic.jpg

Why Does YouTube Want to Offer Video Subscription Service?

By

Updated

YouTube is pushing for video subscription service

Google’s (GOOG) YouTube continues to make rapid strides. In the Market Realist article YouTube Is Becoming a Major Growth Driver for Google, we looked at a number of metrics that have grown at a fast rate for YouTube. Some of these metrics are watch time on YouTube, the number of advertisers on YouTube, and average spending per advertiser.

Currently, YouTube offers ad-supported video content to its users. Now it wants to expand its horizon to an ad-free video subscription service. According to a Wall Street Journal report, YouTube’s chief executive officer Susan Wojcicki wants to go ahead with the subscription service despite controversies. The report also mentions that a majority of YouTube’s content partners have signed up for the subscription service. The motivation behind the introduction of this service is YouTube’s ambition to leverage the fast-growing video subscription market.

Article continues below advertisement

Netflix leads Internet traffic volume in North America

According to a report from Sandvine, Netflix (NFLX) accounted for 36.5% of downstream Internet traffic on computers and networks in North America in March 2015. As you can see in the above graph, YouTube was second in this segment and accounted for 15.6% of all downstream Internet traffic in North America. Apple’s (AAPL) iTunes, Facebook (FB), and Amazon’s (AMZN) Prime Instant Video are some of the smaller players in this segment.

For diversified exposure to Google, you can consider investing in the PowerShares QQQ Trust, Series 1 ETF (QQQ). QQQ invests 3.5% of its holdings in Google.

Advertisement

More From Market Realist