As YouTube celebrates its 15th anniversary, it’s time for parent company Alphabet to take a hard look at its assumptions about the profitable video sharing platform. YouTube once served as the backbone of Alphabet’s business model, with monetization through ads and increasingly through subscriptions, but recently the company has shown signs of having outgrown its parent company. It’s time for Alphabet to recognize this and consider spinning off YouTube into its own separate entity.
1. The Need for YouTube’s Autonomy
YouTube has been an integral part of the internet landscape for over 15 years and has grown to become the number one video platform worldwide with more than two billion users. It has achieved this success due to its autonomy, which allows it to make decisions quickly, without interference from outside sources. The autonomy of YouTube has enabled it to remain on the cutting edge, adapting quickly to changes in the market.
YouTube’s autonomy provides users with a safe and secure space to share and watch videos. Its policies are designed to protect both the user and the creator, creating a platform that rewards creativity, hard work, and innovation. YouTube also works closely with law enforcement to ensure content is not used to spread damaging messages or incite violence. Moreover, YouTube’s autonomy provides an environment for creativity and collaboration to flourish, with most users being able to express themselves without fear of interference.
- Financial Security: YouTube’s autonomy provides financial security, allowing the platform to make decisions without having to rely on outside sources of funding.
- Safety: YouTube’s policies are designed to protect both the user and the creator, providing a safe environment for the free exchange of ideas.
- Creative Freedom: YouTube’s autonomy allows users to express themselves without fear of interference, creating an environment for creativity to flourish.
2. Alphabet and YouTube’s Continued Bond
Alphabet and YouTube have a storied history. The world’s largest video platform started out as a subsidiary of the tech company, and slowly grew to become the single biggest video-streaming site. This bond has only grown stronger with the release of Google Preferred, which offers brands advertising packages to showcase their content in front of some of YouTube’s most dedicated viewers.
In addition, Alphabet’s acquisition of YouTube TV has allowed customers easy access to subscriptions-based top-level channels, such as HBO and other premium networks. Brand influencers have also seen an uptick in opportunities to collaborate with Alphabet and YouTube, further strengthening their already powerful bond. The company’s technologies can even help influencers to create better content, with faster loading and better streaming quality, adding an unbeatable extra value to the viewing experiences.
3. What a Spinoff Could Mean for YouTube’s Future
As YouTube continues to define itself as a go-to platform for user-generated content, one potential outcome to reach wider audiences is a spinoff from its current format. Such a spinoff could be an independent service featuring only certain content from YouTube’s already vast library. Here are some examples of what this could look like:
- A music-only streaming service, akin to Spotify, but which uses YouTube’s music libraries
- A ‘classics’ streaming subscription, allowing users to access older content from YouTube from the past decade
- An educational content service, featuring lectures and tutorials from renowned universities
The potential benefits of a spinoff launch would be primarily financial and in user satisfaction. By creating more targeted content in niche markets, this could stimulate further growth in monetization opportunities, as well as bringing on new users that may have not used YouTube before. A spinoff could also help existing users better tailor their experience, by allowing them to curate their own preferred content. Overall, a spinoff could be an interesting prospect for YouTube with potential to add greater reach and understanding of their own user base.
4. What Alphabet Could Gain from Letting Go
Owning a portfolio of companies broader than any other, Alphabet is faced with a difficult dilemma in the decision to maintain or let go of its many investments. Despite the potential for new opportunities, the behemoth organization could benefit greatly from downsizing.
Firstly, redirecting resources from unnecessary ventures and reinvesting them into working businesses would be a simple way for Alphabet to diversify its portfolio and utilize its funds more efficiently. In addition, offloading some of its shared projects would potentially lead to a better management structure, enabling it to develop a more planned approach to investments moving forward. Eliminating non-identifying areas of business would also lessen the overhead and administrative costs to fuel productive ventures, of course.
- Redirecting resources towards existing projects would be a simple move.
- By downsizing they could manage their investments better.
- Reducing non-identifying investments would reduce overhead costs.
It is clear that Alphabet Inc. needs to spin off YouTube to ensure its prosperity. This will promote innovation, generate more business opportunities, and provide users with improved, specialized services. The real challenge for Alphabet will come in successfully managing the separation and carving for YouTube a viable business as a standalone entity that can effectually compete with the technology giants of today. Only then will YouTube be able to truly reach its potential.