Why YouTube Spending Signals a Changing Content Market

As if dominating the Hollywood studios in the battle for viewers wasn’t enough, YouTube is now poised to outdo them on another front.

New research from Ampere Analysis found that what the research firm described as “the top six global content providers” will account for just over 50% of global content spending for full-year 2024.

Making up the top six are Disney, Comcast, Warner Bros. Discovery, Netflix, Paramount Global and, most notably, Google, whose “contribution to the content market comes via YouTube,” as Ampere explained, “and investment in programming through its revenue-sharing arrangements with content creators.”

As that statement suggests, comparing YouTube’s content spending to those of Disney, Netflix and the like is not a straightforward endeavor.

Unlike the studios, which often take on substantial risks in producing and distributing multimillion-dollar creative gambles, the video giant’s exposure on content is extremely limited. The vast majority of material on YouTube is entirely user-generated and self-funded by its creators — or, if not technically self-funded, still not paid for by YouTube.

The payouts to creators, then, are only made after their content is not just completed but has attained a certain level of success. Per YouTube’s monetization policies, channels are not even eligible for payouts until they have attained 1,000 subscribers with 4,000 “valid public watch hours” within 12 months.

This is not to say the platform should not be taken seriously as a streaming competitor; indeed, YouTube’s business practices, and the benefits they have reaped, have profound and troubling implications for Hollywood.

Most obviously, of course, YouTube’s user-generated content has proven highly successful at drawing consumers away from the traditional production pipelines of the film and TV industry. One need only look at Nielsen’s The Gauge report in any given month for evidence of YouTube’s dominance over U.S. viewers’ streaming time.

But perhaps more troubling is the fact that less than $18 billion paid out to myriad independent creators — less than $16 billion, in fact, given that Ampere’s figure includes the reported $2 billion YouTube now pays annually for NFL Sunday Ticket rights — is enough to make Google the third biggest spender in the global content market.

In 2020, per Ampere data, the tech giant’s programming outlays lagged far behind those of traditional Hollywood and Netflix, at less than $11 billion; just four years later, YouTube is paying more for content than any other company save Disney and Comcast — which are, not for nothing, the biggest spenders on pricey sports rights. (Disney’s figure also includes the $9 billion it paid to Comcast for Hulu in its fiscal first quarter, which, when excluded, brings the Mouse House’s total down to around $27 billion.)

Placed next to YouTube, the relative austerity of the legacy studios’ spending in the post-streaming recession, post-strikes, post-peak TV environment becomes all the more striking. At one time, the studios’ massive investments in top-of-the-line film and TV content simply couldn’t lure younger consumers away from YouTube; now their spending can’t even match Google’s payments to YouTube creators.

It’s a notable tilt in the content market — in other words, one that speaks to Hollywood’s shrinking economics in light of the competition from social video and the shift to streaming. Amid perhaps the greatest existential crisis in the industry’s history, a profound realignment of spending priorities may be needed to revitalize the studios’ fortunes.