Google looks to TV screen to rake in YouTube revenues

YouTube is riding high as advertisers continue to buy into its online video offering--particularly its premium Google Preferred ad category. The primarily short-form online video service's partner revenues are up 60 percent from 2012 and 2013, company executives revealed in an earnings conference call on Thursday. And as more viewers access the service through their television screens, Google (NASDAQ: GOOG) is looking to invest in content that will keep viewers tuned to the big screen.

"(T)he way we look at it is that users are really accessing Internet on large screens with high broadband speeds, and we're getting great monetization on these screens and advertisers are really paying attention," said Omid Kordestani, chief business officer at Google, in response to Macquarie analyst Ben Schafter's question about how it's positioning YouTube.

That attention from advertisers is driving Google to improve its service and content, Kordestani added. "And so in regard to YouTube our focus is really a focus on investments and more content, more creativity."

More than 400 hours of content are uploaded every minute on YouTube, he noted. That continuing popularity is changing the way major advertisers are planning their campaigns.

"With encouragement from Google and YouTube, ABC executed a digital first marketing plan for their new fall TV line up. Their effort included custom five second-ads for TrueView and collaborations with homegrown YouTube stars," Kordestani said.

With many of those YouTube stars rising up through the promotion afforded by multichannel networks (MCNs), Kordestani emphasized that Google wants to be a supportive partner to them. "Just like we are doing that with YouTube Studios, I think MCNs can help a lot of these (creators) become future stars hopefully and develop more success."

Brian Fitzgerald of The Wall Street Journal, in a blog post covering the conference call, felt that Google's take on YouTube and advertisers was not a surprising one. "TV-to-the-Web was another 'transition' story," he wrote. "Much like desktop-to-mobile, Google hammered home that we're in this in-between place where people--either marketers or advertisers or entertainment consumers--are migrating. Google is doling out to make sure it is properly positioned."

Google execs on the call also sounded an optimistic note around their streaming device efforts, notably Chromecast--which in its first year has seen users "hit the Cast button more than 400 million times"--and its first Android TV product to launch, the Nexus Player. Developed in partnership with Asus, the player has all of Chromecast's features plus other goodies like the ability to accept voice commands through its remote control. It also streams games from the Google Play store, and a game controller is available separately. The device retails for $99 and will be available for pre-order starting Friday, Oct. 17.

On a less happy note, Google's earnings for the third quarter of 2014 came in 3 percent below forecasts, at $6.35 per share. Analysts had expected $6.54 per share. And while revenues were up 20 percent year over year at $16.52 billion, they came in just below analyst forecasts of $16.6 billion.

For more:
- see Google's earnings release
- WSJ has this post
- read the Seeking Alpha call transcript

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