If you’ve found yourself increasingly addicted to YouTube and increasingly annoyed by its skippable (but not really) ads, you are not alone, and there’s a reason for it: YouTube is making a ton of money and its parent company, Alphabet (or Google), wants it to make more.
On Monday, Alphabet, in its fourth-quarter and full-year earnings release, for the first time revealed how much money YouTube had been making. The numbers were eye-popping. In 2019, the video streaming platform plowed in $15 billion in advertising and subscription revenue, representing 10% of Alphabet’s total sales for the year.
That means YouTube is now in the same league as Netflix, the world’s largest video streaming platform, which generated $15.5 billion in revenue in 2018. In 2019, Netflix’s sales grew further to $20.5 billion, thanks to its 167 million subscribers worldwide.
Google acquired YouTube in 2006 for $1.65 billion, a sky-high price at the time for a 1.5-year-old company (YouTube was founded in February 2005). The tech giant says YouTube now has two billion users globally, almost matching the user count of Facebook, and more than 20 million paying subscribers for the ad-free YouTube Premium, Music Premium and YouTube TV services.
Those subscriptions are accounted for in Alphabet’s income statement under the “Google other” category, which includes the Pixel phone, Google Home speakers and other hardware products. The category generated $5.3 billion in the fourth quarter and $17 billion in 2019.
Google is known for its generous effort in backing a diverse range of “moonshot” projects, like flying cars and Google Glass, and its laughably singular way of making money, which is advertising on Google Search.
In 2019, search advertising remained Google’s biggest revenue source, raking in $98 billion in full-year sales ($27.2 billion in the fourth quarter). But some of its risky projects have started to pay off, too. YouTube, for example, grew more than twice as fast as Google Search. Revenue from the video streaming platform rose 36.5% in 2019 from the previous year, while Search sales grew only 15%.
Google Cloud, an expensive division in which Alphabet hopes to compete with Amazon and Microsoft, also generated $9 billion in sales in 2019.
“We continue to look toward the future and continue to invest for the long-term,” Alphabet assured investors in the quarterly report. “As we said in the original founders’ letter, we will not shy away from high-risk, high-reward projects that we believe in because they are the key to our long-term success.”