In 2020, over 3.6 billion people were using worldwide. Smartphones have enabled us to feel connected to the world whenever and wherever we are, and with that connectivity has come the need to share more information than ever before. , like , and Instagram, was created in response to this need.
While the online hosting industry is extremely valuable and fraught with competition, few companies have achieved anything like the success of .
To find out the secret of ‘s immense success and to see how it compares to similar platforms like Vimeo, read on.
: An Overview
is an American -sharing that is headquartered in San Bruno, California. Although the company was founded in 2005, it wasn’t until it was acquired by Google a year later for an incredible $1.6 billion that it really found its feet.
Since then, has built a base of over 2 billion active monthly users and more than 30 million paid subscribers. It has truly taken the world by storm.
These figures make the second most popular in the world and the second most popular after Google. Not only is available in over 100 countries – an impressive feat in itself – it is also localized within these countries, meaning it is available in the local language.
In 2020, generated a staggering $19.7 billion in revenue, and it has been estimated that this figure could climb to the same level as Netflix’s revenue in 2021.
While music. However, it began life in more straightforward terms when three former Paypal employees had the idea that people would like to share their home videos online. is, at its core, a -sharing , it has developed several other revenue streams, such as
Since then, many different communities have flocked to the site, making videos about everything from makeup to cats. These microcosms within the user ecosystem have, in some instances, catapulted particular -makers to fame.
James Charles is one example of this. He posted simple makeup tutorials and quickly grew to fame, amassing more than 24 million subscribers. Significantly, he was also invited to the Met Gala in 2019, indicating that has developed the power not only to make people famous within its but to elevate them to true celebrity status.
‘s mission statement is “to give everyone a voice and show them the world.” If you are interested in reading more about other companies’ values, we have compiled a list of the most powerful and enduring mission statements.
Business Model
‘s business model is expansive and extremely efficient at generating revenue. It has three key value propositions: users can discover and watch on-demand, they can display and make money from it, and in doing so, they can also reach a targeted .
Likewise, also has three customer segments, consisting of creators, viewers, and advertisers.
The company’s most considerable revenue stream comes from advertising. Indeed, it generated $19.7 billion from advertisements alone in 2019. However, 55% of ad revenue is paid to creators who are part of the Partners program. This incentivizes the process of -making.
In addition to this, it also has a subscription revenue model for its Music ad-free, offline, and in the background for $11.99 per month. Premium service, which allows users to access and
2018 saw the launch of channel memberships, a Patreon-like feature that lets users become members of their favorite channels. In the US, the most basic membership costs $4.99. YouTubers then receive 70% of the membership amount, and takes the other 30%.
In 2020, it generated $19.77 billion in revenue.
‘s business strategy has been so successful for two key reasons. Firstly, -based platforms lend themselves to higher visit durations and low bounce rates. The average visit duration is 21.46 minutes, which is an incredible figure compared to most other websites and platforms.
Secondly, nurtures its creator community, offering them a fair amount of money. In turn, this makes them loyal to the and more likely to produce regular, high-quality .
Unfortunately for ‘s competitors, its close relationship with Google ensures that it will always be the market leader because it has access to an immense amount of data and advertising opportunities.
Ultimately, has found a winning business model.
SWOT Analysis
A SWOT analysis assesses the strengths, weaknesses, opportunities, and threats to a business. It is cost-effective and beneficial for generating business insights.
Strengths
- Community.
The community is a vibrant place where people from different backgrounds and interests can find a home. The -making encourages this strong sense of community which increases brand loyalty.
- High ranking.
is the second-highest-ranking website due to its low bounce rate and high average visit durations.
- Multi-language support.
can be accessed by people worldwide, meaning that its communities can cross borders and language barriers.
- User-friendly interface.
It’s straightforward to use , overall and other important regarding their , whether you’re a viewer or a , and its videos can be shared widely across the web. The also has a helpful which helps creators monitor the success of their . It can also help them track their ,
Weaknesses
- Intrusive .
For those unwilling or unable to afford Premium, can be highly distracting when watching and can even lead users to leaving the website in frustration.
- Data security.
In August 2020, 230 million Instagram, , and TikTok user profiles were exposed in a data leak. With so much user data on the , leaks pose a genuine threat that could quickly create distrust towards the company. Moreover, given that operates across the globe, it must also be vigilant of different data protection laws in other areas.
- Copyrighted material.
This is one of the biggest ongoing problems that faces. Users often upload that is protected under copyright laws; it is up to to try to regulate this. But with so many videos being uploaded every hour, that’s no easy feat.
Opportunities
- Streaming services.
With such an impressive amount of revenue behind it, could branch out to create its own filmmaking studio, much like Netflix and Amazon Prime have.
- B2B
Now more than ever, businesses around the world are seeing the urgency of operating online as well as in-person. could set up a business-to-business help center aimed at teaching other companies how best to utilize . This is something they are slowly beginning to do in 2021.
Threats
- Competitive market.
The industry grows day by day, with many companies attempting to emulate ‘s success. While it’s unlikely they will ever feasibly be able to do so, this does make it more challenging for to stand out from the crowd, with millions of videos being posted online.
- Demand for professional, high-value .
With Netflix and Prime offering hours of high-quality, professional at the click of a button, it’s becoming increasingly clear that this is where the future of is at. Users may no longer be satisfied with semi-professional home videos.
The global online industry was valued at $6.13 billion in 2020 and is expected to rise at an annual growth rate of 18.4%. High-value industries attract intense competition, and while faces no severe threats to its unique position within the market, it must constantly adapt and evolve to ensure that its lives up to the high standards that have come to be expected of it.
Below is online -hosting industry. of ‘s four top competitors within the
Vimeo
Vimeo, Inc is an American Software as a Service (SaaS) company that facilitates the hosting and sharing of videos online. It was founded in 2004 and is headquartered in New York City.
Like , Vimeo operates a subscription-based revenue model. However, Vimeo’s payment plans are based on the quality and quantity of videos that users wish to store on the site. Plans begin at just $7/month for 5GB per week, and basic membership comes with a limit of 500MB.
Whereas ‘s primary revenue stream comes from advertising, Vimeo takes pride in the fact that there are no on its .
Another key difference between Vimeo and B2B . It counts Wix, Deloitte, Samsung, and MailChimp among its customers. As such, it is said to have a more professional customer base. is that Vimeo focuses largely on
Vimeo’s annual revenue hit $199.4 million in 2020. The year before, it acquired Magisto, a startup with more than 100 million users that provides tools for creating and editing short-form videos. This reinforces Vimeo’s strategy to offer a comprehensive suite of making, editing, and storing tools, eliminating the need for other platforms.
There are several features and tools that make Vimeo unique:
- Replace , keeping the same URL and stats.
- Set passwords on videos.
- Decide which domains can embed your .
- Insert your own branding into videos.
- Earn money with pay-per-view.
TikTok
Founded in 2016, TikTok – known in China as Douyin – provides a app for sharing short-form mobile videos and live streaming. It allows users to watch, create, and share 15-second videos shot on cell phones.
Despite being relatively new to the industry, TikTok has rocketed to fame, amassing over 100 million active users in the US alone. In 2020, it generated $1.9 billion in revenue, up from $350 million the year before.
TikTok offers in-app purchases, allowing users to buy coins from 99 cents to $99.99, which can then be used to tip their favorite creators. According to an April 2019 report from Sensor Tower, the company grossed $80 million from in-app purchases globally.
The company’s mission statement is “to inspire creativity and bring joy.”
However, the app has also been embroiled in controversy. In 2020, President Trump ordered a ban on new downloads of TikTok because of privacy concerns regarding the Chinese Government.
Likewise, concerns have been raised about child protection issues regarding the widespread use of the app by young teens. The company has even faced child data privacy fines by the FTC.
Love it or hate it, it looks like TikTok is here to stay. The app has become so popular that it regularly starts viral trends, and many professional businesses have also recognized the potential that it has as a . For example, the Chipotle restaurant chain ran a Halloween “Boorito” coupon giveaway which encouraged TikTok users to dress up.
TikTok is available in over 150 different markets, with offices in Moscow, Beijing, Los Angeles, Mumbai, Seoul, and Tokyo.
is a French -sharing owned by Vivendi. It was founded in 2005 and is headquartered in Paris, France, though its reach stretches considerably further than that. In fact, is available in 149 countries and 183 languages.
In 2009, the French Government invested in through a Strategic Investment Fund, and in 2011, Orange acquired a 49% stake in the company for 62 million euros. Then, in 2013, it acquired the remaining 51% before Vivendi purchased an 80% stake from Orange, increasing to 90% a few months later.
More recently, partnered with Chinese smartphone giant Xiaomi in 2020 to distribute via the Mi app. Xiaomi is the fourth-largest smartphone company globally.
Unlike Vimeo, presents itself more strongly as a and news ; its website consists of several areas of interest, including featured news, sports, entertainment, and music. In this respect, it is similar to .
One key area where the companies differ is in their overall vision and values. Whereas focuses on quantity and global reach, strives to provide users with high-quality videos which “resonate with each individual in a more ethical and improved watching environment.“
The company attracts 300 million monthly active users, 2 billion monthly views, and +2,000 publishers.
videos come with advertisements that appear before, during, or after the . This is how creators – known as publishers within the site – are able to monetize their .
It has been estimated that the company generates around $19.6 million in revenue.
Vevo
Vevo (short for “ evolution”) is a premium American -hosting and entertainment service founded in 2008 and headquartered in New York, New York. The company is best known for providing music videos to , but it also distributes to other syndication partners, including:
- Apple TV
- Pluto TV
- Roku.
- Amazon Echo
- Fire TV
- Samsung TV Plus
- Vizio
- Xumo
Vevo is responsible for posting over 450,000 videos, with people spending more than a billion hours per month watching them. It produces music videos from Sony Music Entertainment, Universal Music Group, and EMI. hosting is provided by partners, and the revenue from advertising is then split.
In addition to advertising revenue, Vevo also makes money by selling merchandise and commission-based payments for referrals to Amazon Music and iTunes. Even in 2014, the company was estimated to be worth around $1 billion; since then, Vevo has grown considerably, taking advantage of the rise of to build its even further.
For example, after seeing the incredible success of streaming platforms like Netflix, Vevo began to produce its original shows focusing on the music industry.
The company’s largest market is within the US, followed by countries in Europe and the Americas.
How Stands Out
According to a recent Pew report, platforms, with usage growing from 73% of adults in the US in 2019 to 81% in 2021. stands out because it can capture users’ attention and keep it, with the average user spending longer on the site than almost any other. was the biggest winner of the pandemic out of all the
‘s easy-to-use interface and extensive library keep it miles ahead of the competition.
Frequently Asked Questions
Question: Which company is the online video hosting market leader?
Answer: YouTube is the market leader, with revenue expected to hit between $29 and 30 billion in 2021.
Question: What is YouTube’s competitive advantage?
Answer: YouTube certainly benefits from being owned by Google, which has a positive impact on its advertising opportunities. This is because Google tracks websites and web users, constantly analyzing them, and YouTube has access to all this data.
Question: Who is YouTube’s biggest competitor?
Answer: While YouTube is the undisputed market leader facing few significant threats from rival companies, there is still a significant amount of competition out there which the company must constantly keep track of.
TikTok, in particular, poses a threat to YouTube because it too has the advantage of being able to keep users on the site for a long time. Moreover, it appeals to the younger generation, whose lives are far more entwined with the digital world.
The biggest threat to YouTube is its age – as time passes, it may be viewed by younger generations as a stale or outdated platform. In this respect, YouTube must continue innovating to stay relevant.
Question: Why choose YouTube?
Answer: YouTube is an all-around easy-to-use video-sharing platform that unites different communities worldwide, giving them a space to communicate new ideas and have fun. While Vimeo has attempted to put a professional spin on this idea, YouTube’s inclusivity is one of its greatest strengths.
Conclusion
With more and more people using the internet every year, there has never been a better time for YouTube as a business. People want access to information instantly, and they no longer want to spend time reading or researching to get it. That’s why video is such a strong form of media; it has the power to grab anyone’s attention anywhere.
New apps like TikTok might come and go, but YouTube will stay relevant because of its simplicity. It taps into the heart of what it means to exist in modern society and to use the internet.
If you are interested in reading about similar businesses, take a look at the articles below:
- Amazon Competitors Analysis How Do They Diversify?
- Siemens Competitors Analysis: Do They Maintain A Strong Market Share?
- Airbnb Competitors Analysis: How Do They Stand Out?
References
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https://www.businessmodelsinc.com/business-model-youtube/
https://whatisthebusinessmodelof.com/business-models/how-youtube-makes-money/
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