Is YouTube Going After Netflix? This Could Be the Biggest Sign Yet
Key Points
Alphabet recently announced it is expanding its partnership with NBCUniversal.
YouTube Premium subscribers will have access to an ad-supported version of Peacock Premium.
The move may set the stage for fiercer competition between Netflix and YouTube.
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Netflix (NASDAQ: NFLX) is a leader in the streaming industry, and it's been dominant even as other rivals have struggled to turn profits. But its most significant rivalry may still be in its early stages, involving Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), the tech company that owns Google and YouTube.
As Netflix has diversified by getting more content creators on its service and venturing into live sports, YouTube has also expanded. And its most recent move may be the clearest evidence yet that the tech company may be going after Netflix's core audience.
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YouTube Premium will provide subscribers with access to Peacock's streaming service
The main reason for users to buy a YouTube Premium subscription today is to avoid ads on YouTube. But the company is giving consumers even more of an incentive, as it recently announced that YouTube Premium subscribers in the U.S. will also be able to access the ad-supported version of Peacock Premium, the streaming service Comcast owns. In addition, some sporting events from NBCUniversal (which is part of Comcast) will also be streamed on NBC's YouTube channel.
This agreement makes a subscription to YouTube Premium potentially a more compelling option than Netflix, whose content relies heavily on its own shows and movies and on content it can license. YouTube already offers a wide range of content, with 20 million videos uploaded every single day, and may be able to appeal to more of Netflix's core consumers by also enabling them to access a top streaming service such as Peacock.
For a long time, Netflix has provided consumers with considerable value due to its modestly priced plans. But with frequent price hikes in recent years, there may be reason for consumers to consider their options, and YouTube may prove to be a much more viable alternative in the future.
Alphabet may be the ultimate entertainment stock to own
Netflix's business may face its toughest test in the future as YouTube expands and offers consumers more value. Investing in Alphabet may be the safer move for growth investors, as its business is highly profitable and contains many exciting opportunities to tap into, including entertainment via its YouTube streaming platform.
Alphabet has the deep pockets to compete with Netflix, and with YouTube already offering a broad mix of content, adding top TV shows and movies as part of its YouTube Premium subscription could make it a no-brainer option for consumers looking for value these days.
While Alphabet may already be one of the most valuable companies in the world, these recent developments highlight precisely why it can still be an excellent long-term growth stock and why its valuation may rise even higher in the future.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Netflix. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
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