Why did Yahoo's 2Q earnings disappoint? (Part 7 of 8)
Yahoo still lags in the video advertising market
In the prior part of the series, we discussed Yahoo’s (YHOO) 2Q14 earnings and the performances of its display and search advertising business. During the conference call to announce second quarter earnings, Yahoo’s management mentioned that it’s focusing on bringing unique premium video content to its users. It announced two original series—Other Space and Sin City Saints, in April this year, that would be debuting on Yahoo Screen. In June, it announced that it will host the sixth season of the TV show Community with 13 new episodes. During the second quarter, Yahoo also started to offer an online comedy series and forged a partnership with Live Nation to stream concerts on Yahoo.
Yahoo isn’t a top players in video streaming market
According to a report from Qwilt and as the previous chart shows, Netflix (NFLX) dominates the U.S. online video streaming market with a share of 57%. Google’s (GOOGL) YouTube, Amazon (AMZN), Hulu, Twitch, and Apple (or AAPL) are some of the other players in this market. However, Yahoo isn’t on the list. According to Yahoo’s management, the company achieved a 22% quarter-over-quarter (or QoQ) increase in daily active users and 29% increase in daily active page views on Yahoo Screen. However, this increase must be on a smaller base, which is why it isn’t figuring in the list of the top six players in this market.
YouTube leads the U.S. video advertising market
According to a report from eMarketer, YouTube’s U.S. video ad revenues will hit $1.22 billion this year. It will claim a 21.1% revenue share of the overall U.S. video ad market. Increasing mobile usage is also helping increase YouTube reach. According to a report from Comscore, Facebook’s (FB) application (or app) reach is the highest on smartphones in the U.S. at ~74%. YouTube’s app reach on smartphones is at 50%, which is incidentally higher than Google’s own search application. This shows how Google has successfully managed to grow its video advertising business through YouTube.
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