But even if YouTube succeeds in nailing the tech, and getting a leg up on its competition, that doesn’t mean the streaming TV market will be an instant goldmine. The margins on the early streaming TV services appear to be razor-thin, and the price point YouTube is offering isn’t going to change that.
But the crux of that opportunity doesn’t lie in big initial margins, it comes from the potential to fundamentally shift how TV ads work. As it stands now, TV networks sell most of the ad inventory for their shows. And in the early days of a YouTube streaming TV service, that will continue, with YouTube itself selling only a few minutes of ads per hour on its own service. But that will change, Pacific Crest analyst Andy Hargreaves wrote in a note last month.
“Google’s vastly superior data should allow it to monetize its ad inventory at superior rates to networks,” he wrote. “Over time, this disparity should allow Google to capture a greater share of total ad inventory on its service. Played out over several years, we believe the natural evolution of a successful Google vMVPD service [YouTube TV] would be for the roles of content supply and ad selling (both currently done by TV networks) to split, with Google managing the ad selling and networks relegated to content suppliers.”
Source: YouTube TV needs to nail technical performance – Business Insider