Alphabet Launches YouTube Red

Alphabet Inc-C (NASDAQ:GOOG) recently released YouTube Red in the United States, and has plans to roll it out globally. YouTube Red is a disruptive streaming offering and combines the following into a neat package:

1) An ad-free YouTube experience- YouTube Red subscribers won’t see a single ad while on YouTube.

2) Access to 30 million+ songs through Google Music.

3) Exclusive content from top YouTubers.

All of this will cost YouTube Red subscribers just $9.99 per month. This is the same price as a monthly Netflix (NASDAQ:NFLX) or Spotify subscription. The fact that Google waited this long to release YouTube Red is incredibly surprising.

With Netflix and Spotify growing their subscribers and revenue on a stratospheric rate year-upon-year, one would think that Google would have stepped into this industry earlier. Additionally, due to Google’s vast user base and the leverage which YouTube affords them, they will be able to roll out the service at a stratospheric rate.

Secondly, Google is a data-driven company, and they have access to a wealth of information with regard to the types of video and audio content people like to listen to. As a result, it won’t be silly to think that Google will use this when creating original content in the future.

In order to appreciate how significant YouTube Red could be for Google, it is worth analyzing the current state of the paid streaming industry.

YouTube Red And The Competition

Netflix is the biggest company with regard to streaming tv shows and movies. The company has approximately 69 million users, and a majority (40 million) are in the United States. As a result, there is significant room for growth internationally. However, a bottleneck is broadband availability and speed. It is worth noting that access is increasing at a steady pace. Google will be hoping to quell the growth of Netflix.