Google has been pushing YouTube and YouTube TV toward more share on connected TVs, which it envisions will become more like connected computing experiences in the future.
During this week’s earnings call, Google CEO Sundar Pichai was asked about YouTube’s growing role on bigger screens and how his company can help drive consumer adoption of connected TV. He said Google is shaping its connected TV strategy under the assumption that smart TV experiences will become more interactive over time.
“They're going to be connected computing experiences. People will both consume content passively and actively including gaming, over-the-top video and so on. So, we view this as part of our platform shift. Android TV has made tremendous strides. It's a very customizable platform. We are working not only with TV providers globally, we are doing it with cable box manufacturers, as well as we supplemented with Google TV with Chromecast as well,” he said, according to a Motley Fool earnings transcript. “So, it's a significant investment from our side, making sure we can drive that shift and obviously it adds a lot of synergies for us in terms of being able to bring our services to our users, as well as give more opportunities for our [Google Play] developers to reach more users as well. But definite strong integration points with YouTube and YouTube TV as well.”
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In the U.S., Google has more than 120 million people who watch YouTube on TVs every month, up from like 100 million last year. Philipp Schindler, chief business officer at Google, cited Nielsen data suggesting 70% of YouTube's reach was delivered to an audience not reached by traditional TV advertising.
“In other words, YouTube's reach is becoming increasingly incremental to TV and this audience dynamic is a huge win for brands,” he said. “In fact, Nielsen found that U.S. advertisers who shifted just 20% of spend from TV to YouTube generated a 25% increase to their total campaign reach within their target audience, while lowering their cost per reach point by almost 20%.”
The commitment to connected TV could be helping drive some of the significant growth in advertising revenue for YouTube, which recorded $7 billion during the quarter, up 84% year over year. At the same time, Google’s Other revenues totaled $6.6 billion, up 29% year over year, which CFO Ruth Porat attributed primarily to growth in YouTube non-advertising revenues.