Alphabet's suite of digital subscription services, including YouTube Premium, YouTube Music, YouTube TV and Google One cloud storage, will generate $15 billion in revenue in 2023, according to Alphabet CEO Sundar Pichai.
Pichai told analysts on Alphabet's fourth-quarter 2023 earnings call that the $15 billion revenue figure from subscriptions has grown fivefold since 2019. The company did not provide a breakdown of revenue by service or update subscriber numbers.
Pichai said: "YouTube is our primary driver of subscription revenue. YouTube Music and Premium have strong momentum. They attract passionate users and generate strong returns for the music industry and creators."
YouTubeTV "is also doing great," he said. The NFL's "SundayTicket" is an off-field game package exclusively available on YouTube in the United States for the 2023 season. "It has found the perfect home on YouTube." According to reports, Google will pay the NFL up to $2.5 billion per year in the seven-year "Sunday Ticket" agreement, and the Internet giant may view it as a loss-making deal.
"NFL Sunday Ticket supports our long-term strategy and helps solidify YouTube as a must-have app on everyone's TV," Google chief commercial officer Philipp Schindler said on the earnings call. "The company is pleased with sign-ups for football packages on YouTube TV and standalone YouTube."
But he did not provide the number of Sunday Ticket users over the course of the year. Schindler added that the company is looking "closely" at the possibility of expanding Sunday Ticket to markets outside the United States.
In November 2022, the company said that the total number of paid users of YouTube Music and YouTube Premium had exceeded 80 million. The company said that as of June 2022, the number of YouTubeTV users has exceeded 5 million (including users with free trials).
On average, each YouTube Premium user generates more revenue for content creators, music and media partners, and YouTube itself, Schindler said.
Ruth Porat, president and chief investment officer (former chief financial officer) of Alphabet and Google, said that in the fourth quarter, Alphabet’s revenue costs (excluding traffic acquisition costs) were US$23.6 billion, a year-on-year increase of 5%. The main reason for the increase was content acquisition costs related to YouTube subscription products.
In the fourth quarter, YouTube's advertising revenue was $9.20 billion, a year-over-year increase of 15.5%, in line with Wall Street expectations; this does not include subscription revenue. Overall, Alphabet beat expectations with revenue of $86.31 billion (up 13.5% year-over-year) and earnings per share of $1.64.