Alphabet was established to help Google develop its ideas beyond search into areas as diverse as self-driving cars, medical technology, and high-speed internet connections. But itâ€™s YouTube, still a part of Google prime, that the company is touting as one of its first big successes outside of search.
During Alphabetâ€™s first quarterly earnings call yesterday, Google CEO Sundar Pichai gushed about the video streaming service. YouTube now delivers hundreds of millions of hours of video per day, and much of that is happening on mobile devices. And itâ€™s not just people watching cat videos. â€œPeople turn to YouTube and they want to research, buy or fix a product,â€ he boasted. â€œFor example, mobile watch time for apparel videos has doubled this year and videos about toys have also doubled.â€ Thatâ€™s why Google has added shopping ads that allow people to make purchases directly within a video.
Although search is an important part of YouTube, itâ€™s not fundamentally a search product in the way Image Search and even Google Maps are. Android and Chrome have been successful, but are mostly designed to drive usage of Googleâ€™s services, rather than to generate revenue directly. And while endeavors like Google+ have sputtered, YouTube has become an incredible social phenomena.
Last quarter Kordestani revealed that the average YouTube mobile session is 40 minutes and claimed that YouTube now reaches more 18 to 49-year-olds than any single US cable network. Even if a good chunk of that time is spent streaming music rather than staring at a screen, it still gives Google an awful lot of opportunity to sell ads, and so far it looks like advertisers are jumping at the chance.
Thatâ€™s good news as the company tries to adjust its business model for the mobile world. Google is doing well in mobile search, increasing revenue in its mobile advertising this quarter and last. But thereâ€™s also much more competition in mobile search today. For local search there are apps like Yelp and OpenDoor. For comparison shopping thereâ€™s Amazon. Facebook, meanwhile, is trying to completely upend the way people search for products through its personal assistant service M. And though Google is the default search engine on iPhones, Apple does its best to route around Google search results and send you right to Apple Maps or the iTunes store when you do a search in Safari on iOS.
Things may even get more competitive on the desktop as well. Microsoft has finally made its Bing service profitable by taking a page from Googleâ€™s playbook: the company is driving adoption of its Cortana virtual assistant, which uses Bing by default, by giving away Windows 10 upgrades for free.
None of this means that Google is in trouble per se. It might even be good news, given its antitrust concerns. But Google certainly has more competition in search than it has since its early years. That means if it wants to keep growing, it needs its other investments to start making money. And right now, YouTube is the best bet it has for doing that.
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Article source: http://www.wired.com/2015/10/sorry-search-youtube-is-more-important-to-google-than-ever/