The following is an excerpt from Jack Hough | December 26, 2015 | Barrons.com |
Last February’s Super Bowl delivered 114 million U.S. viewers, making it the most-watched television broadcast in American history. In June, a YouTube user uploaded a video of toddlers playing in a tub of colored balls, then naming the colors. It has been watched 249 million times. In fairness, the football game went for hours, while The Ball Pit Show is about two minutes. But then, the game is over, while the video is still running—and it doesn’t even rank among the 25 most-watched YouTube clips this year.
At the top, with 1.3 billion views, is a music video from rapper Wiz Khalifa featuring a song from the seventh installment of The Fast and the Furious film franchise. Your middle-age reporter, not one for rap or racing, had a look. If it were television, he might have seen a commercial for, say, Gatorade, based on the video’s youthful content. Instead he got a discount offer from Brooks Brothers. He recently bought suits there, as it happens, and was thinking about shirts.
Investors should take a fresh look at YouTube, for three reasons. First, it is growing at an astonishing pace. Parent company Alphabet (ticker: GOOGL), which changed its name from Google in August, doesn’t break out YouTube results in its quarterly reports, but earlier this year it noted that viewing time had jumped 60%, year over year, and that mobile viewing time had doubled. Television, meanwhile, has been holding steady only with viewers age 50 and up, while the 25-to-34 cohort spent 8.6% less time watching it last quarter than a year earlier, according to Nielsen. Over four years, that group’s viewing time is down nearly 24%.
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