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What’s Driving Google to Alter Its YouTube Content Strategy?

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Google looks to control content costs

Google is moving away from funding expensive shows for YouTube Premium programming, Bloomberg reported in March, citing people familiar with the company’s changing content strategy. According to the report, Google has stopped accepting proposals for expensive shows, suggesting a need to control costs and a slowdown in its competition with Amazon (AMZN) and Netflix (NFLX) for Hollywood-quality shows.

In its pursuit of digital video subscription dollars, Google created YouTube Premium to challenge Amazon Prime Video and Netflix in the market. YouTube Premium costs $12 per month.

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YouTube set to face more competition in the ad market

The change in content strategy at YouTube Premium comes a few months after Reuters reported that Google would make future original shows available to both paid and free subscribers as a way to give advertisers broader access to its video audience.

The changes in YouTube’s content strategy also come as AT&T (T) and Comcast (CMCSA) are gearing up to launch ad-supported online video services that will compete with YouTube. Last month, Viacom (VIAB) also completed its purchase of Pluto TV, an ad-supported Internet TV service and a rival to YouTube in the digital video advertising market.

The digital video advertising market is expanding

Google is far from being the only major Internet giant that seems to want to cut back on content costs. Facebook (FB) is also reducing funding for individual shows for its Watch video platform.

In their video push, Google and Facebook mostly have their sights set on the rapidly growing digital video advertising market. In the United States alone, spending on digital video ads is expected to reach $58.4 billion by 2023 from $27.8 billion in 2018, according to eMarketer estimates.

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