Jul 16, 2019

Challengers circle YouTube's throne

Illustration: Rebecca Zisser/Axios

New reports suggest that YouTube, the incumbent king of internet video, is losing ground to newer upstarts like TikTok and Twitch that are capturing the attention of young consumers and brands.

The big picture: YouTube's market problems are being compounded by intense scrutiny from regulators and advertisers — challenges that until recently have landed more in Facebook's lap.

Driving the news: Several recent reports highlight the ways that new players are out-innovating YouTube in key areas.

  • Social video: TikTok, the Bytedance-owned social karaoke app, is exploding in the U.S., and is on pace to become the hottest social video app in America. TikTok has become the hottest destination for social influencers looking to make it online, dominating interest and conversation at this year's VidCon gathering less than a year after launch, The Atlantic's Taylor Lorenz reports.
  • Live-streaming: Twitch, the Amazon-owned video-streaming service used primarily for esports, has dominated livestream viewing, according to a new report from StreamElements cited by TechCrunch. Twitch viewers live-streamed a total of 2.72+ billion hours in Q2 ,or 72.2% of all live hours watched. That's compared with 735.54 million hours on YouTube Live, or 19.5% of all live hours watched, per the report.
  • Creator tools: YouTube is adding more ways for creators to make money on its platform, The Verge reports. According to Business Insider, "YouTube is likely trying to counteract monetization moves from rivals Twitch and Facebook, which could threaten the platform's ability to attract and retain new or smaller, emerging creators."

Between the lines: Reports suggest that YouTube's market problems can at least in part be attributed to concerns that the company is lax about enforcing safety and security standards.

  • At VidCon, creators complained about YouTube's content moderation problems, according to Buzzfeed News. "I didn't know I started a hate platform" should no longer be an acceptable excuse for not taking responsibility, a YouTuber said on one panel, cited by Buzzfeed.
  • A study last month by PwC found that by 2021, more children's advertisers will shift their budgets away from YouTube and channels that are non-compliant with children's privacy laws.

Yes, but: YouTube is still an advertising cash cow, and continues to dominate other metrics, like live TV streaming and market reach.

  • Analysts forecast that YouTube TV captures roughly 21% of the total digital skinny bundle market, coming in second only to Hulu with Live TV.
  • eMarketer estimates that YouTube will account for 11.5% of all video ad revenue in the U.S. this year. 
  • Comscore ranks "Google sites," which primarily consists of YouTube, as top video entity in the U.S., with more than double the reach of the second most popular video destination — Facebook.

Be smart: Despite YouTube's growing challenges, critics' concerns about the service's dominance are louder than ever.

  • Congress is holding a hearing Tuesday on anti-competitive practices by big tech companies. The Justice Department has opened up an investigation into Google's market power, and the Federal Trade Commission is reportedly toying with asking YouTube to disable ads against kids content.
  • Meanwhile, Bloomberg's Lucas Shaw and Mark Bergen note in a new piece about YouTube's regulatory headwinds that businesses like AppNexus and Vevo that used to work closely with the video giant are now turning against it, plotting "an antitrust revenge."

The bottom line: 2019 may be the year that YouTube's longstanding video dominance begins to face serious challenges from upstarts looking to win over advertisers, creators and regulators.

Go deeper

YouTube faces creator backlash

Illustration: Rebecca Zisser/Axios

YouTube, the Google-owned video platform that gave rise to dozens of famous video stars, is now facing pushback from the very community that it has worked to build over the past decade.

Why it matters: YouTube's creator backlash is occurring as other user-generated video platforms begin to emerge as creators' favorites — most notably, Chinese-owned karaoke-style video app TikTok.

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Kids' privacy forces best behavior on Big Tech

Illustration: Aïda Amer/Axios

Although the U.S. government is still struggling to define regulations for the tech industry, it's finding ways to take action over the growing portion of the internet used by kids.

Why it matters: An increase in federal penalties against tech companies for violating kids' privacy rules is shaping new expectations for how the internet will be governed.

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Google in the Senate hot seat

Google's Karan Bhatia at Senate Judiciary hearing. Photo: Alex Wong/Getty Images

Google faced stern words from both sides of the aisle at a Senate Judiciary subcommittee hearing about its power over online content Tuesday afternoon.

Why it matters: As new privacy regulations and antitrust initiatives aimed at Big Tech build momentum, everyone on Capitol Hill seems to have their own set of gripes with the companies, leaving them little political safe harbor.

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