Earlier this month, YouTube Primetime Channels launched here in Germany, the first market where the product has appeared outside the U.S.
Just like the American version of Primetime Channels, YouTube offers a package of premium streaming services, both in linear and on-demand form, for German consumers to purchase. It’s not unlike similar products that aggregate programming from other tech giants in the U.S. market, including Amazon, Roku, Apple and Verizon.
At first glance, this may seem like just another me-too product, but one should never forget that Google is quite meticulous in its strategic thinking when the company moves into markets — especially when they seem as crowded as the streaming universe. Google is going after the biggest screen in the home, and it has very good reasons to do so.
While some associate YouTube with viewing on mobile or PCs, that has become old thinking. As the company touted in May at its upfront presentation, usage of the YouTube app on TV screens grew faster in April than any of its competitors in the U.S., including Netflix, according to Nielsen.
That growth is important to YouTube because the company wants to be in pole position in the race to dominate the living room.
Smart TVs slowly turned the big screen into a central media hub. Think of the smart TV like you would think of smartphones — just with a bigger screen. More services and functionalities became available over time, and more people use their big screen now for more than watching movies or sports in HD.
Soon the big screen and its TV operating system, or user interface, will migrate into being a “super app” for everything you need to manage your daily life. As Daniel Rausch, Amazon’s VP of entertainment services and devices, told Variety’s “Strictly Business” podcast in April, the point is to make TV hardware the hub of the smart home, beyond just media usage.
Another byproduct of this super app strategy is it generates a lot of data, and that is what every market entrant in the category, including Google, is after — just as much, if not more, than revenue.
There is no better way to achieve this than by grabbing as much viewing time on TV sets; hence, Primetime Channels enters the scene.
But there is hard cash involved in this decision as well. While Google search ads have shown some growth over the years, the real potential in advertising is in online video ads. That is the area where Google as a company saw the largest growth in revenue over the past five years. While that has slightly dampened in the last year, forecasts predict there will be a better growth track for online video advertising for years to come and that lots of budgets will be shifted in that direction.
So it makes sense both strategically and commercially to shift gears and focus on YouTube growth and the goal of putting it on even more screens.
Christian Knaebel is the CEO of Global Media Consult, a boutique consultancy for strategy and business development for international TV, broadcast and media clients, to guide them through the transformation and disruption in the audiovisual industry.
