As Per Cisco, Internet video views doubled from 2015 to 2016, and video will account for 80% of all mobile Internet traffic by 2019. Google indicated growth in watch time on YouTube has accelerated and is up at least 50% year over year for three straight years. We believe video advertising will follow usage, and global online video advertising spending is expected to increase $19bn from 2015 to 2018 (per Magna Global) to reach $35bn, creating a big opportunity for video content platforms (FB, Snapchat, etc).
Google does not disclose revenues, but indicated in 2015 that partner revenue was up 50% over last 3 years. Based on Online video ad market growth driven by new content, faster Internet speeds, and increasing mobile usage, we estimate 2016 YouTube gross revenue to touch $11.0bn Given scale (10%+ of est. gross revs), we think pressure will build on Google to disclose YouTube revenues.
YouTube revenue estimates are based on TTM management commentary on usage/partner revenue growth, and estimate YouTube will add 4pts of growth to Google Website revenues in 2016, helping offset deceleration in search