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Alphabet Inc (GOOG) Avoids War With Netflix (NFLX), Starts Paid YouTube Service

Youtube Alphabet GOOG

Alphabet Inc is worth at least $800 per share if it can find a way to make money fromYouTube. Analysts at Goldman Sachs were at the forefront of that bullish push in August when they had price target of $800 on the firm’s shares and rated them at “Conviction Buy”. Now, Alphabet is ready to unlock that value as it prepares to launch a paid version of YouTube where you get to watch the ads-free videos as well as premium content that is not available on the free version of the site.

google Inc youtube is the source of value

Recode reports that Alphabet Inc will unveil the paid version of YouTube as well as some of the premium content for the service at its studio/event space in Los Angeles on Oct. 21. Recode notes that “YouTube will continue to operate a free, ad-supported version of the site, and has said that all of the videos that appear on the free site will be available on its paid version.

There’s little sense in fighting Netflix

Netflix, Inc. Amazon Prime and Hulu have already carved out the video streaming service among themselves and new entrants such as Apple and Google might not be able to make a decent foothold in good time. Apple and Alphabet Inc have the deep pockets that could have then squeeze Netflix out of the market by offering huge slash prices and snagging content deals with bigger offers.

However, Apple doesn’t always go cheap – it prides its self on premium offerings at a premium price. Alphabet Inc would have cut of Netflix with cheaper prices, but the firm is now taking a stricter approach to costs and it won’t throw money down the drain just to compete with Netflix. Hence, instead of setting themselves up for a war in the video streaming space, both Apple and Alphabet Inc are taking different routes to the video streaming space.

Apple and Google take different routes to video

Apple Inc is getting ready to start streaming TV – not movies and it is already in talks with major media houses for deals. The Apple TV service is going for $40 per month in line with Apple’s premium pricing model. MacRumors reported “Disney and CBS will likely be among the first networks to reach a deal with Apple for its à-la-carte streaming TV service… Cable channels such as Discovery and ESPN are also expected to be included in the subscription-based service…”

Alphabet Inc is also in the paid streaming market by offering a premium version of YouTube. The firm has said that all content creators who make money its service must come on board the paid premium service. The move was to ensure that paid users are not locked to watching only paid videos while there are countless number of other ad-supported videos that might interest them. The firm says the move is necessary ” to ensure that fans who choose to pay for an ads-free experience can watch all the same videos that are available on the ads-supported experience.”

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.