On Thursday, Google/Alphabet announced their results for the third quarter. The company reported $18.7B in revenues for the three-month period ending on September 30th. Google has always made a ton of cash, even with many of the other parts of their company not really making a profit, and often times losing money (remember when Motorola Mobility was part of Google? Yeah.). So where is Google or Alphabet’s future? Well they pretty pointed at it this week with their YouTube Red announcement.
The future is bright, and red. Get it? YouTube is one of the most popular websites in the world. With the only ones more popular being other Google sites. About a billion people visit YouTube each month. To give you an idea of how substantial that is, there are 7 billion people on earth, and of that 7 billion, the largest country in the world has YouTube blocked (that’d be China, with over 1.35 billion people as of 2012). That’s pretty insane. Now imagine if all of those people signed up for YouTube Red – we know it won’t happen, but just think about it – that’s $1 billion each month. We already know the future is in video, and Google wants to be sure that YouTube is that future. With their YouTube Red announcement, they are taking the appropriate steps to do just that.
On the other side, Mobile Ads are also their future. As much as we love Google for their driverless cars, and smart thermostats and everything else they put together there in Mountain View. They are still an ad company. Right now Mobile is huge. It’s bigger than desktop in a lot of categories. So getting ads in mobile is going to be a huge priority for Google. After all that is more than 90% of their revenue, most quarters. Both mobile ads and YouTube are coming full circle as well, as Google’s CFO has stated that the average watch time on mobile on YouTube has more than doubled in the past year. And that, boys and girls, is Google’s future.
Now, remember, Google bought YouTube about 9 years ago for a sum of $1.65 billion. That’s about half of what they paid for Nest last year, and only a small fraction of what Google bought Motorola for back in 2011. YouTube is quite possibly the best acquisition that Google has ever made.