YouTube TV projected to become profitable this year, eventually surpass Comcast subscription counts

YouTube TV is looking ahead to two key milestones: Reaching profitability and surpassing a legacy pay provider as the top way people pay and watch TV.

Analyst Michael Nathanson of MoffettNathanson estimates that YouTube TV will become profitable this year, hitting $200 million in operating income later in 2024.

In 2023, the Alphabet-owned virtual multichannel video programming distributor lost $300 million.

Operating income will continue to rise, eventually hitting $600 million in 2026.

That same year, Nathanson’s report estimates, YouTube TV will push Comcast aside as the top pay TV provider. Projections in the report say it could hit 12.4 million subscribers, a climb from the 8 million count Alphabet announced in February 2024.

To be clear, YouTube TV is not a streaming service — but rather a streaming television service. This means it sells subscriptions that let consumers view feeds of multiple linear channels in much the same way as legacy MVPDs. YouTube TV doesn’t, however, own or produce most of the content it sends into homes, unlike a standalone SVOD streaming provider.

That, combined with projected subscriber losses at Comcast and other legacy MVPDs, will put the service at the top of the pack, though it still isn’t likely to command more combined subscribers as legacy outlets do together.

This climb to the top has been swift. YouTube TV launched in 2017, meaning it will have taken it about nine years to surpass the legacy rival in its category; the general market trends favor YouTube TV and emerging at No. 1 so quickly likely wouldn’t be as realistic if Comcast and other legacy companies weren’t shedding subscribers at the rate they are.

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Of course, projections are just that, projections, so that doesn’t guarantee YouTube TV’s eventual lead, though almost every sign within the industry seems to support that it’s likely to happen.

Soaring cable and satellite bills have created a swell in cord-cutters as mobile video consumption on social media and other alternative platforms also command more eyeball time. More consumers are shifting to streaming services for entertainment, including free ad-supported ones

At least part of YouTube TV’s rise to dominance is thanks to its price point, which offers comparable options as higher-level cable packages at a lower price. It also has never required any long-term contracts and tends to tack on fewer fees than legacy providers. Users are also free to select what devices they watch on — without having to rent any pesky cable boxes. 

That said, ultimately, YouTube TV still has to have a way to stream into homes and onto mobile devices, which obviously requires an internet connection. Most consumers still buy broadband from legacy companies, including Comcast, which is arguably one of the main reasons its service is still around. 

That said, wireless companies are now upping their broadband game, offering select markets 5G wireless data plans for homes and businesses. This essentially means that, even when sitting on the couch streaming video content, users are still using technology similar to cellular data plans rather than wifi with a connection to hardwired internet access.

YouTube TV is likely able to offer its lower price for several reasons.

First, it doesn’t have to invest in installing and maintaining broadband (or traditional) cables in towns across the country that create the infrastructure that makes it possible to view its content (the legacy media companies have taken care of that). Even the wireless internet services rolling out still require substantial capital investment in network upgrades (Alphabet does have some investment in fiber deployments in select markets, but it’s small compared to its other businesses and the legacy providers).

YouTube TV also likely spends less on customer acquisition. Though it’s ventured in pricey third-party sponsorships and legacy advertising more in recent years, much of its earlier marketing was done via sister company Google’s existing ad technology and word of mouth referrals. 

With the backing of Alphabet, YouTube TV is also able to sustain losses for a longer period of time as it focuses on building its subscriber base (much like how Amazon scaled up without making any money for years).

That said, YouTube TV isn’t exactly cheap — at $72.99 a month, it’s the priciest among major vMPVDs, though it also typically has the most channels. Other features, such as unlimited cloud DVR with storage for at least nine months, make it stand out as well, delivering value-added propositions to consumers. 

The service has also invested heavily in building ways for subscribers to easily capture all the content they might want to watch, especially in the area of sports, where users can record all games featuring their favorite team — not matter what channel — with just a few clicks. This feature includes yet-to-be-scheduled matchups. The focus on sports and other “events” has likely been wise given that live sports and events appear to one bright spot for linear TV. 

YouTube TV also could be facing some challenges as it charges forward with growth.

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There’s been a call for it and services like it (such as Hulu + Live TV) be regulated as true MVPDs. Currently, their status of “virtual” ones means they are not subject to many FCC regulations that legacy companies such as Comcast are (including recent actions toward banning “junk fees” on bills).

It’s also possible that YouTube TV could face antitrust or similar challenges from other companies or the government as it continues to grow. Since it’s ultimately part of the same corporate group as Google and YouTube, both of which command a huge portion of the search and digital advertising market, it could be in the position to become even more powerful in those arenas. 

The service also raises privacy concerns, since Alphabet already maintains huge stores of data about its users that can be tied into television viewing tracking. Like legacy TV proivders, YouTube TV has the option to insert its own advertising over select breaks on many of the channels it carries — and can sell those spots for whatever price it can command. It could end up commanding higher price points for spots because of its data tracking and targeting capabilities, though it still has to be sensitive to growing concerns over privacy. 

While the DVR features makes most traditional advertising breaks in non-live content skippable, the service’s focus on live sports could become a key way to still maintain revenue from traditional commercial breaks. The service can also insert non-skippable ads into its on-demand content as well as a boosting revenue by selling numerous add-on packages with extra channels.