Competitive Rivalry

YouTube has some competitors within the industry, for example, Vimeo, YouKu, Dwango, Dailymotion, etc. So far, YouTube still manages to be the largest platform compared to its rivals combined. YouTube has a competitive advantage over Vimeo on offering free access to its users. Another competitor being Dailymotion, which started around the same year as youtube. However, it has a lack of originality to be able to compete with YouTube.

● Youtube has a few competitors in the industry and is large in size, and this means that competitors in the industry will not be able to make a move without being noticed. Therefore, the rivalry among existing firms is a weaker force in the industry.

● There’s a few competitors with a large market share, so this means there’s a possibility of engagement in competitive actions to try to become market leaders. For this reason, the rivalry among existing firms is a stronger force.

● The industry that YouTube is in is growing every year and is expected to continue growing. Positive Industry growth means that competitors are less likely to engage in competitive actions due to more market share and no need to usurp from one another. Therefore, we assume that the rivalry among existing firms is a weaker force within the industry.

● The industry in which Youtube operates has high fixed costs. This makes the companies within the industry need to be productive to full capacity.

Companies have to come up with strategies to boost sales when the demand is down. In conclusion, the rivalry among existing firms is a stronger force within the industry.

● The products produced are highly differentiated. As a result, it is harder for competitors to take the customers from each other because they are unique.

For this reason, makes the rivalry among existing firms a weaker force within the industry.

● The production within the industry requires a large capacity. This can lead to overproduction. Therefore, the rivalry among existing firms is a stronger force within the industry.

● Due to the high investment required to operate, the exit barriers within the industry are exceptionally high. In addition, the requirement for government regulations and restrictions makes firms within the industry unwilling to leave the business while the profits are low. We conclude that the rivalry among existing firms is a stronger force within the industry.

● The strategies of each company within the industry are diverse. It can result in competing with each other in terms of strategy, which makes the rivalry among existing firms a strong force.

Chapter 5

Strategic Group Analysis

Strategic Group Analysis is to look at other companies' positions in the competitive environment and the competitive dynamics of an industry. It benefits from defining the competitors and evaluating the strategies of these competitors. This can help assess strategic dynamics and shifts in the industry to determine current and potential strategic movements in the market. However, it cannot tell competitor goals;

thus, strategies are often unclear, and choosing the wrong dimensions will not differentiate groups into useful categories.

In this strategic group analysis, we discussed and found some online sharing platforms in both premium and non-premium for users: YouTube, Vimeo, Dailymotion, Facebook, Instagram, Spotify, Twitch, and Netflix, HBO, and Disney+. Moreover, the two variables that we choose to analyze this strategic group are content and premium platforms.

Strategic Group Mapping

Figure 5: YouTube’s strategic group mapping

Group 1: Limited Sharing Platform (Spotify and Twitch)

Table 2: Number of Content and Language of Limited Sharing Cluster Group 2: Social Media Video (Facebook, Instagram, Twitter)

Company Content

Table 3: Number of Content and Language of Social Media Video Cluster Group 3: Premium Video Platform (Netflix, HBO Now, Disney+)

Company Content

Netflix Paid subscription Medium and Exclusive

14 20

HBO Now Paid subscription Medium and Exclusive

8 2

Disney+ Paid subscription Medium and Exclusive

11 16

Table 4: Number of Content and Language of Premium Video Platform Cluster

Group 4: Free Video Sharing Platform (YouTube, Vimeo, Dailymotion)

Table 5: Number of Content and Language of Free Video Sharing Platform Cluster

*Exclusiveness of Content: Content is exclusively available only on the specific platform.

5.1: Limited Sharing Platform (Spotify and Twitch) 5.1.1 International competition of Cluster: Low

Spotify provides recorded music and podcasts from record companies and media companies subject to digital copyright restrictions, including more than 60 million songs. As a freemium service, essential functions are provided free and unrestricted through advertisements, while other functions (for example, offline listening and ad-free listening) are provided through subscriptions. The users can search for music by artist, album or genre, and create, edit and share playlists. Spotify operates under a freemium business model (essential services are free, while other features are provided through paid subscriptions). Spotify revenue comes from selling premium streaming subscriptions to users and selling advertising placements to third

parties. As of November 2018, The Spotify subscription program offered in two types, all offering unlimited listening time, are:

Type Remove

Table 6: Differentiation between two types of Spotify Subscription

Twitch is a live-streaming platform service that initially focuses on video gaming live-stream, for example, real-time broadcasting of esports competition, game-related announcement, general gameplay, and more. Later, the content on Twitch has expanded to music broadcasts, creative content, and, more recently, “in real life” streams. The content on the website can be viewed either live or via video on demand. Twitch Prime is a premium membership for Twitch users, which comes bundled with Amazon Prime and Prime Video subscriptions. Twitch Prime members receive free games, in-game content, free subscriptions to their favorite channels, and more.

Twitch had tried to address music copyright issues when they launched The Twitch Music Library in 2015, but it was shut down last year without explanation.

Spotify has paid $9.76 billion in royalties to artists, music record companies, and distributors since 2006. Now, some of Twitch’s music partners had already been catering to creators by publishing their free-to-use music as Spotify playlists.

5.1.2 Mobility Barriers:

The mobility barrier of this cluster is high. Spotify and Twitch are limited sharing platforms. Spotify primarily focuses on the music field, and Twitch primarily focuses on video game live streaming. If they move themselves to other clusters like the premium video platform, they need to broaden more areas. Relying on their original single domain is entirely unable to compete in the premium video platform market. Furthermore, if they move themselves to the free video-sharing platform is a very terrible idea because they rely on their premium system to earn profits.

5.2 Social Media Video (Facebook, Instagram, Twitter) 5.2.1 International competition of Cluster: High

The competition in Social Media Video platforms is high. Linked Research, 2014 indicated that 81% of small to medium-sized businesses (SMEs) alone used social media for marketing purposes, including video content and video advertisement to attract more audiences who generally use social media platforms. Moreover, Using social media by general users increases from 7 percent to 65 percent from 2005 to 2015, and it rapidly becomes undeniable that competition on social media is at an all-time high.

However, in terms of video creators’ revenues, they are different. For Facebook, there are two ways that Facebook pays for creators. First is the number of views ($264 for every million video views) and from advertisement during the video (average, $0.97 per click and $7.19 per 1000 impressions). In contrast, Twitter will pay the creators from videos with its pre-roll ads only. Furthermore, Instagram has not paid a dime for IGTV content since its launch.

5.2.2 Mobility Barriers:

The mobility barriers of these social media are high, Facebook Instagram and Twitter are platforms to share data, news, photos or videos to your followers and friends. If they move themselves to other clusters like the Free Video Sharing platform they will lose their signature of posting everything on users’ timeline. And if they move themselves to a premium video platform is also impossible because in general, all the users can use the platforms for free and if the users have to pay some money to be premium users, they won't be satisfied and can cause them to change to another platform. So It is not a good choice for them at all.

5.3 Premium Video Platform (Netflix, HBO Now, Disney+) 5.3.1 International competition of Cluster : High

The competition in Premium Video Platform is high. According to the competitors in Premium Video, customers have a chance in various options to select the worth platforms which serve their needs. For the Premium Video platform, users have to pay a subscription fee for services. Moreover, the contents, such as movies, television shows, or programs, are the most significant factors to compete with their competitors.

However, each platform’s content is quite similar; therefore, they have to provide better quality and various types of videos and content to serve customers. Regarding one of the crucial factors of Premium Video Platform, the subscription fee is the factor that can persuade customers to select their platforms. Thus, the more quality in contents and the less subscription fee, the more popularity and customers.

Furthermore, the subscription fee of Disney+ is $6.99 per month or $69.99 per year with 4K Ultra HD in Dolby Vision and HDR10. Netflix’s Premium Plan subscription fee is $15.99 per month with HD or 4K Ultra HD. HBO Now’s subscription fee is $15 per month with Ultra HD. Thus, they have to provide more useful content and services to be impacted by customers.

5.3.2 Mobility Barriers:

The mobility barriers of these premium videos are medium. For premium video, customers are willing to pay a subscription fee for the better quality and services expected to be served with the platform’s excellent services. Suppose they want to shift themselves to Free Sharing Video. In that case, customers will be satisfied due to the better quality of contents and services than other free sharing video platforms, like YouTube, Vimeo, and Dailymotion. However, they will lose numerous subscription fees for providers’ aspects, and their advantages will decrease. Furthermore, if they want to move themselves to Limited Sharing platforms, it would be duplicated in their services and wouldn’t improve their businesses’ benefits. On the other hand, if they want to convert themselves to Social Media platforms, it is quite impossible because, initially, their services and contents are premium video contents, television shows, and movies; thus, their services are not free like Social Media platforms.

5.4 Free Video Sharing Platform (YouTube, Vimeo, Dailymotion) 5.4.1 International competition of Cluster: Medium

The competition between free video-sharing platforms is considered a medium due to the content uploaded to platforms. These free platforms allow users to reach their content for free with or without the registered account. However, to upload videos on the platform, users need to register an account. Thus, The content on this cluster’s platform is uploaded by individuals, and the content is unique. Therefore, users who watch the video go to the specific platform for each platform’s unique content.

However, as they provide free services, users can easily switch to use services from other competitors without any barrier.

5.4.2 Mobility Barriers:

For this cluster, mobility barriers are at medium since the user base on these platforms is various. The platform can offer premium quality content with subscription fees and sell to a portion of its original user. However, to attract new users to join their premium content is difficult since the other competitors in the premium cluster are powerful. On the other hand, moving to the limited cluster is considered an unwise decision due to their user base being attracted to the platform with the content's wide variety and uniqueness. The players in the limited cluster are known for their specialty.

Therefore, moving to the limited cluster has a high possibility to satisfy their user base and unable to convince the new users due to disadvantages in their specialty.

Chapter 6

Resource and Capability Analysis

A Resources and Capabilities analysis is an analysis of the potential of a company. It is a powerful tool for sizing up a company’s competitive assets and determining whether the assets can support a sustainable competitive advantage over market rivals. The main finding is to identify the owned or controlled resource by a company that none other has and use as a company’s competitive asset. Resource and capability analysis highlights the tools and internal opportunities a company could use for maximizing its outcome.

For YouTube, the most standout resource is its technology. The parent company of YouTube is Alphabet’ a leading company in technology; therefore, YouTube gains cost reduction, which is a massive advantage over competitors within the same industry. This analysis will highlight other company resources of YouTube into two categories including; tangible resource and intangible resource.

6.1 Resources

Below are analysis of tangible and intangible resources of Youtube, including financial and physical resources, technology, reputation, patents, entertainment and culture, and human resources.

6.1.1 Tangible resource Financial

● Income

Youtube’s video-sharing platform has its core income from online advertisement channel services. As mentioned, Youtube is one of the subsidiaries company under ‘Alphabet’ who is the leading player in the industry. Youtube has been generating the most amount of income for its parent company. It is considered a fast-growing company and has seen an increase in revenue at a considerably fast rate.

YouTube ads generated $15.15 billion in revenue in fiscal 2019, compared with $11.16 billion in 2018; this does not include YouTube’s non-advertising revenue.

For YouTube’s non-advertising revenue, the Youtube premium subscription was $3 billion in 2019. YouTube has seen enormous growth, according to the newly released numbers. In fiscal 2017, the platform generated $8.15 billion in ad revenue, followed by $11.15 billion in fiscal 2018. In other words, YouTube’s ad revenue has nearly doubled over the past two years. Overall, Alphabet hit $161.8 billion in revenue in fiscal 2019; therefore, Youtube alone generates 24.5% of its parent’s revenue.

Physical

● Youtube headquarter

Youtube’s headquarters is located at 901 Cherry Avenue San Bruno, California, United States. In January 2016, YouTube purchased an office park for

$215 million. The complex has 51,468 square meters (554,000 square feet) of space and can house up to 2,800 employees. The building corporate innovative design strategies, for example, raised flooring, displacement ventilation, operable windows, and extensive daylighting, all justified through rigorous cost-benefit analyses. Due to its unique advanced integration of building systems, Pacific Gas and Electric has recognized the building as the second-most energy-efficient office building in the state.

The facilities provide Youtube employees who work here. The departments are including research and development, marketing, and customer relation. The BrandLab is a place for customers, executives and their advertising or creative agencies charged with building brands and growing revenue, to generate ideas on how to create better connections with people through YouTube. Google built the Google BrandLab to assist its clients as a digital partner to help more brands utilize YouTube's full potential. The BrandLab's physical space was created in September of 2012, where YouTube employees can collaborate with brands and agencies to tell their brand's stories.

Figure 6: Atmosphere inside the Youtube’s headquarters at San Bruno, California

● Youtube Space

YouTube Space is a physical location built by Youtube for content creators.

Content creators use it to produce content as well as learn about creating content.

YouTube Space provides content creators facilities to produce content for their YouTube channels. YouTube Space is entirely free to use, and YouTube provides equipment, studio space, post-production facilities, training, and workshops. Content creators, however, must hire their film crew if they wish to do so.

The first opened YouTube Space was in London, Kings Cross the year 2012.

The facility holds three soundproof shooting sets, editing equipment, a store for creators to sell their merchandise, and lastly, a community area with a coffee stand.

There are currently ten YouTube Spaces worldwide, including London, Los Angeles, Tokyo, New York, São Paulo, Rio de Janeiro, Berlin, Paris, Mumbai, and Dubai.

Figure 7: One of the sets inside YouTube space in London

6.1.2 Intangible resource Technology

● Technology Know-How

Alphabet’s R&D department is well-established and is continuously searching for new ideas and technologies to transform the current services and increase its

competitive advantage. (anon, n.d.) Alphabet is shown to be a leading company in the information technology industry. It has brought several market-leading products, from the smartest search engine to the Adsense browser and advertising platform.

Alphabet invests a significant amount of time, money, and effort to continually advance its technological abilities centered on increasing internet security, faster download, innovations that generate more revenues, and customer satisfaction. It also focuses on IaaS (Infrastructure as Service) to support enterprises in implementing cloud computing systems in their organizations. Youtube profited from a reduction in operational costs from technological development provided by Alphabet, and the use of PaaS (Platform as a Service) has boosted operational efficiency.

(Rodrigo, 2016).

● Youtube API

The YouTube Application Programming Interface (YouTube API) grants the ability to reclaim feeds related to videos, users, and playlists. It also provides the capability to manage those feeds, for example, creating new playlists, adding videos to favorites, and sending messages. YouTube is well-known for its user-friendly and easy to use website interface. YouTube’s website design is focused on enhancing user experiences from all the three stakeholders; user, content creators, and advertisers.

The API allows developers to access video statistics and YouTube channel data. Google describes the YouTube API Resources as "APIs and Tools that let you bring the YouTube experience to your webpage, application or device." The Players and Player APIs section identifies methods to let your users watch videos in your application and control the playback experience. You can use player parameters to customize the player's appearance and use Player APIs to control the player from

your web page or application directly. A significant benefit of YouTube's API's is that 3rd party companies can manage pay per click linked with advertising for the videos.

Therefore, it allows the video creators to receive money for the effort they have put into their videos. YouTube APIs also allow stronger integration of the video service into a 3rd party website.

Reputation

● Brand Name

Google obtained YouTube for US$1.6 billion in 2006. Analytics estimate YouTube to be worth up to US$170 billion in 2020, delivering Google a 100x return in under 15 years. YouTube ranked the 5th largest digital ad platform with a 6 percent share, after Google Search, Facebook, Google Display, and Instagram.

- YouTube carries value to its three key stakeholders:

Users: free, targeted, and relevant video content in various categories, including

entertainment, educational, tutorial, news, et cetera.

Creators: monetize video content on the platform with the broadest reach. Allows creators to focus on delivering quality content and outsource hosting and marketing costs to YouTube.

Advertisers: YouTube is the second-largest social media platform in the world with

over 2 billion monthly active users. Youtube can create brand impacts and targeted reach across a global audience. YouTube eventually aims for global viewership and monetizes by selling ads to businesses.

Rankings where listed Year Position

Best Global Brands 2020 30

BrandFinance Global 500 2020 26

BrandZ Top 100 Most Valuable Global Brands 2020 37

The Top Most Loved Brands 2020 10

The Top Most Loved Brands 2020 10