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Why YouTube TV Is the Future of Cable TV



#YouTubeTV #CableTV #CordCutting #Alphabet

As more people cut the traditional cable, YouTube TV may be best positioned to pick up the pieces.


Since cutting the cable cord more than four years ago, I've made the rounds of streaming TV services. I've been a subscriber of Netflix, Hulu, Hulu Live TV, AT&T's DirecTV Now, and Dish Network's Sling TV at various times with varying results. But every service has its weaknesses, especially when it comes to the availability of live sports.

This year, I made the switch to YouTube TV, and I think it's become by far the best streaming replacement for cable TV. It has the major local channels, the best sports content, and most popular non-sports cable channels as well, all for $40 a month. What's worse for competitors is that Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), YouTube's parent company, can provide the best technology of streaming services, and it doesn't have to make money on YouTube TV to survive, allowing it to undercut rivals who will struggle to compete.

YouTube TV is playing with house money

Many popular streaming options have a tie to one of the traditional cable providers, giving them an inroad with consumers and an incentive to keep them from cutting the cable cord entirely. Dish's Sling TV is the largest, with 2.2 million subscribers as of the end of 2017, followed by AT&T's DirecTV Now, with 1.5 million subscribers. CNBC reported that early in 2018, Hulu Live TV and YouTube TV trailed with 450,000 and 300,000 subscribers respectively, so YouTube TV is a small player in streaming TV so far. (Hulu is owned by Disney, Comcast, Twenty-First Century Fox, and AT&T.)

However, remember that YouTube TV is essentially gravy for Alphabet right now. It's an add-on to YouTube, which is still the biggest streaming platform in the world, and Google provides cloud services to competitors like Netflix, so it's making money on multiple parts of the streaming business.

TV is Alphabet's next growth platform

Alphabet doesn't disclose numbers, but it's fair to say a recent ad push has increased YouTube TV's visibility, and likely its subscriber base. Managing Director for YouTube/Video Global Solutions Debbie Weinstein recently said that TV screens now account for 150 million hours per day of watch time for YouTube (this includes YouTube and YouTube TV). YouTube says it has "over a billion users ... and each day those users watch a billion hours of video."

What makes YouTube TV intriguing from a consumer perspective is a user experience that's superior to other options. In my experience, YouTube TV streaming is considerably more reliable than Hulu's or Sling’s live offerings, which have suffered from widespread outages since they were launched. Maybe that shouldn’t be a surprise considering how long YouTube has been in the streaming business. On top of reliability, YouTube TV also has unlimited DVR recording and the service operates seamlessly between mobile and set-top box streaming devices.

As a company that's been in streaming for longer than any of its competitors, it's no wonder YouTube was able to bring a great streaming product to the market. If Alphabet continues to be intent on growing to the TV screen, there may not be any competitor that can keep up.


AUTHOR

Travis Hoium
Travis Hoium has been writing for fool.com since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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