Will Alphabet Extend its Dominance to Video Streaming?
Online and mobile video consumption is increasing by the day and Alphabet Inc.’s GOOGL Google remains strongly positioned in this space with its YouTube platform.
Year-to-date, the stock has outperformed the Zacks Internet-Services industry. It returned 3.20% compared to the industry’s return of 2.34% over the same period.
In its race to target TV ad dollars, Alphabet allowed third-party (Nielsen and comScore) tagging of YouTube videos to determine the effectiveness of ads on YouTube versus ads shown on TV.
Now the company is looking to offer video makers more opportunities to generate revenues while collecting a sizable amount itself in the process.
Google Unplugged in the Works?
Google is reportedly preparing for the launch of its own video streaming service called Google Unplugged. If the rumors are true, the company will be entering a crowded and highly competitive market marked by the presence of AT&T’s T DirecTV Now, Dish Network’s DISH Sling TV and Sony’s SNE PlayStation Vue.
The company has reportedly reached agreements with CBS, Viacom, Disney and Twenty-First Century Fox for provision of their programming to Google’s new service. Google Unplugged is expected to be launched by Feb 2017. Such services known as skinny bundles of networks are increasingly emerging as less expensive alternatives to traditional packages.
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Google’s Strategy
It’s not that easy to make way through a crowded marketplace but Google appears to have its strategy in place.
Google is reportedly planning to offer the new service at less than $40 a month, a price that will certainly place its competitors in a spot of bother.
Notably, Sony charges $45 to $55 for three levels of its PlayStation Vue service. DirecTV is currently available for a promotional price of $35 and will cost $60 at the end of the promotional period.
Moreover, Google is offering channels at a far better price that satellite and cable providers and asked them to provide programming data in return, a move that could give it a big competitive advantage.
Our Take
If Google Unplugged happens, it will underscore the company’s continuous efforts to launch products and services for multiple industries. Google is leaving no stone unturned in the process of growing.
As Alphabet generates significant cash from operations and also holds a huge cash balance, management has the flexibility to pursue growth in any area that exhibits true potential. This flexibility, along with its technological prowess allows it to pursue opportunities in different markets, offsetting the late-mover disadvantage.
Zacks Rank
Currently, Alphabet is a Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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