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YouTube Dominates the Living Room, Pressuring Media Companies to Choose Between Ally and Adversary

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Nearly two decades since Alphabet’s YouTube launched, Hollywood still grapples with its role in the media landscape.

YouTube, pioneering user-generated content, now commands a significant share of media consumption, not only online but also on TV screens in American homes.

In May, YouTube captured 9.7% of viewership on both connected and traditional TVs in the U.S., marking the largest share for a streaming platform ever reported by Nielsen’s “The Gauge” report. Netflix followed with 7.6% of viewership. Among streaming platforms alone, YouTube claimed nearly a quarter of the market share.

Rich Greenfield, media analyst at LightShed, highlighted its impact: “We’re not talking about your mobile phone or laptop—it’s on the biggest screen in the house, the TV. Every media executive has to be paying attention.”

However, media giants like Netflix, Disney, and Warner Bros. Discovery remain divided on YouTube’s role.

Some view YouTube as complementary to subscription services and cable TV—an unwieldy hub of non-narrative, creator-driven content that diverges from traditional media centers in New York and Hollywood. Others, including the same executives at times, perceive YouTube as an existential threat, siphoning viewers from subscription platforms and influencing American youth culture.

This dichotomy has spurred diverse strategies among media companies to counteract YouTube’s ascent.

For instance, Disney mulls integrating user-generated content into Disney+, although it’s not imminent. Conversely, Netflix and Warner Bros. Discovery concentrate on traditional TV viewing, avoiding direct competition with YouTube.

Tara Walpert Levy, YouTube’s VP of Americas, noted its unexpected rise in TV viewership, underscoring its role beyond mobile and laptops: “When Nielsen first noted that YouTube was winning the streaming wars in terms of viewing, full stop, not just for ad-supported platforms, it exceeded even our expectations.”

YouTube’s financial prowess underscores its dominance. In 2023, it earned $31.5 billion in ad revenue, up 8% from the previous year and 271% in six years. Its recent first-quarter ad revenue surged 21% year-over-year to $8.1 billion.

Despite its disruptive force, questions linger about YouTube’s long-term appeal and whether younger audiences will outgrow its format. Yet, its integration into daily media consumption remains undeniable, challenging traditional media’s established norms.

As the landscape evolves, media companies face a pivotal choice: embrace YouTube as an ally or navigate it as a formidable competitor reshaping the future of entertainment.