Alphabet said Tuesday that its YouTube division generated $8.66 billion in second-quarter advertising revenue, up 13% over the $7.66 billion it made in the second quarter of 2023. 

YouTube, however, fell short of equity analysts’ forecasts of around $8.93 billion in quarterly revenue. 

The growth rate was also off Q1’s torrid 21% expansion to $8.1 billion.

Just in domestic connected TV consumption alone, YouTube controlled nearly 10% of all viewing in June, second only to Disney’s combined platforms, according to Nielsen’s latest “Media Distributor Gauge.”

Meanwhile, Alphabet beat analyst expectations overall, reporting Q2 revenue of $84.74 billion (up 13.6%).

YouTube CEO Neal Mohan recently revealed that the company’s YouTube TV vMVPD service has surpassed 8 million subscribers, supplanting Dish as the fourth largest pay-TV platform in the U.S., behind Charter, Comcast and DirecTV. 

YouTube TV long ago cemented its place as the largest virtual MVPD (vMVPD), well ahead of second place Hulu Plus Live TV, which touted around 4.6 million subscribers as of the end of 2023. 

A Feb. 6 letter to investors from equity research company MoffettNathanson admits that, after touting YouTube TV’s success over the past couple of years “in coming to dominate the vMVPD business… Now it’s clear that the growth at YouTube TV is even stronger than we had anticipated.” 

It All Started as Just a Super-Cheap Skinny Bundle

Launched in 2017, at a time when “skinny bundles” were the big craze as viewers sought to shed some of the pay-TV bundle bloat in favor of smaller cheaper packages, YouTube TV was priced to fill that demand. For $35 a month, users got a package of about 60 channels, including the major broadcast networks, as well a respectable serving of over 40 cable channels. 

But alas, creeping bloat inevitably set in. And in 2019, the company hiked the price to $50 per month after adding Discovery’s lineup of networks to the platform.

Then in June 2022, the company upped its monthly fee again, from $50 to $64.99 after adding ViacomCBS channels.

YouTube TV’s last big price increase in March 2023 brought upped the monthly bill  to $72.99.

YouTube TV offers a base tier of more than 110 channels, along with numerous optional add-on packages, including 4K Plus, Spanish Plus and Sports Plus as well as third-party add-ons like Max, Starz, CuriosityStream or AMC Plus. 

Subscribers have the flexibility to cancel at any time and they can watch on just about any device with a web browser or any of the popular platforms, including Google Chromecast, Apple TV, Fire TV and Roku players and TVs.

Fast Growth

YouTube TV's rise through the vMVPD ranks has been somewhat dramatic as traditional pay-TV operators have been shedding subscribers at an accelerating rate.

Parent company Alphabet doesn't typically break out subscriber metrics for the Google operating unit pay TV service.  

Before releasing the 8 million figure in February 2024, Alphabet said in July 2022 that YouTube TV had amassed 5 million subscribers after about five years in operation. 

So, within a span of about 19 months -- as Comcast, Charter and DirecTV collectively bled millions of subscribers -- YouTube TV added around 3 million paying customers. 

In its February 2024 report, MoffettNathanson noted that the growth of YouTube TV is perhaps the only thing keeping cord cutting from accelerating further. 

Longtime Pay TV Incumbents Are Just Handing Over the Keys

Remarkably, the pay tv business has gotten so untenable for small-to-midsized cable operators that they’ve been willing to just point their customers to a vMVPDs like YouTube TV under a marketing partnership agreement, wash their hands of it and stick to selling broadband. 

In fact, this has become a business driver for YouTube TV. Smaller cable operators, who lack the bargaining clout of Comcast or Charter, can get eaten alive in the crazy world of pay TV carriage rights and many of them are happy to hand over their customers, wholesale, and maybe just work out a joint-billing arrangement or bundle it with broadband for a year to keep their customers happy. 

In March, Frontier Communications, which has bundled third-party virtual pay-TV services with its fiber-based high-speed internet service tiers for several years, started integrating its customers’ monthly fees for YouTube TV with their main broadband bill. 

Customers are showing a definite preference for this type of bundling of their communications services, especially when it comes with a bit of a discount. 

Last summer, Englewood, Colorado-based midsized cable operator WideOpenWest (aka “WOW!”) officially shuttered its own IPTV service, WOW! TV Plus, and made YouTube TV its go-to video platform, transitioning its remaining 117,000 customers to YouTube TV.

In August, WOW! began offering YouTube TV to new customers at a $10-a-month discount for one year, with the virtual pay TV's billing integrated into their monthly high-speed internet and/or mobile statement. 

In November, the company reported that more than 13% of its new customers are signing up for the YouTube TV bundle.

WOW! CEO Theresa Elder told analysts during her company's third-quarter earnings call that the relationship was mutually beneficial. "One of the things we're also seeing is we have new customers who perhaps wouldn't have considered us before, [they] are considering us now because of the YouTube TV offering,” she said.

Even Charter, now the biggest pay-tv operator in the U.S., seemed quite willing to walk away from the whole pay-TV business during a recent two-week standoff with Disney that saw a blackout of ESPN’s fall football coverage. Throughout that time, Charter directed football hungry fans to sign up for YouTube Live TV or Fubo.

It was enough to make Disney blink in a carriage negotiation.

In the end, Disney relaxed its notoriously stringent bundling demands, letting Charter jettison a few less popular channels, including Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo. 

But more importantly, Disney conceded wholesale discounts for Charter to resell Disney Plus and ESPN Plus bundled with its own Spectrum TV Select programming package.

Those concessions were enough to keep Charter from throwing its hands in the air and walking away from the video business altogether, at least for now. 

Integrating NFL Sunday Ticket

In late 2022, YouTube TV won a bidding war, beating out other deep-pocketed competitors like Apple, Amazon and Disney, for the highly prized NFL Sunday Ticket package of out-of-market games football games. 

Since 1994, NFL Sunday Ticket had been a crown jewel for satellite operator DirecTV, which had been paying about $1 billion per year in recent years, but the satellite operator was forced to walk away from the table when the stakes got too high.  

YouTube TV is reportedly paying the NFL as much as $2.5 billion annually for Sunday Ticket, which offers Sunday-afternoon NFL telecasts in markets where the games aren’t available locally.

With Sunday Ticket in its back pocket, YouTube TV signed on as a presenting sponsor of the NBA Finals in June and blitzed ABC’s live broadcast with so much promotional content, that even seasoned sports pundits thought its omnipresent ads were overbearing, calling them “breathtaking even by modern sports standards."

As the NFL season kicked off, YouTube TV parent Google flexed some of its “vertical integration” muscle when it integrated NFL Sunday Ticket natively on the Google TV, promoting the package to millions of Americans on their TV’s home screen. In the U.S., Google TV powers not only the popular Chromecast With Google TV CTV device, but also smart TVs made by Hisense, Sony and TCL, among other brands. 

The service kicked off in September with the start of the NFL season. Aside from some pre-season promo offers, the service was priced at $299 for existing YouTube TV subscribers, or $349 for non-subscribers.

As the season progressed, the company lowered the price. By Thanksgiving it was down to $174 and in December, as the season entered its 15th week, the price dropped to as low as $79 for the remainder of the season. 

The company hasn’t revealed how many subscribers have taken the package, but in October, Morgan Stanley Research estimated that YouTube TV had around 1.5 million NFL Sunday Ticket subscribers and that it would take around 3.18 million subscribers for Google/YouTube to break even. As a result, NFL Sunday Ticket probably generated a loss of around $1.2 billion in its first season, according to Morgan Stanley. 

This has sparked discussion about how NFL Sunday Ticket may just be a loss leader for Google or YouTube TV, but what business doesn’t lose money in its first year? 

For a company like Google, $1.2 billion a year is just petty cash. To put things in perspective, in its most recent quarterly report, YouTube reported a 15.5% year-over-year increase in Q4 ad revenue, which reached $9.2 billion, but that includes its wildly popular streaming website alongside the vMVPD service. The company does little to break down the numbers for its media business beyond that, but overall, the internet company reported Q4 revenue of $86.31 billion. 

In that context, a $1.2 billion bet on NFL football’s popularity in the U.S. seems like a bit of a no-brainer. 

Pay TV Blackouts and Other Kerfuffles

YouTube TV has had its share of business disputes along the way. In 2021, the company had a small carriage dispute with Disney that resulted in a 36-hour blackout that kept ABC, ESPN, FX, Disney Channel and other Disney-owned networks off YouTube TV. At the time, the company offered a $15 credit for customers who were impacted by the blackout. 

Perhaps the company’s largest dispute was a ruckus brawl with Roku in 2021 that spilled over quite publicly when Roku dropped the YouTube TV app from its app store. Roku said Google was demanding that it manipulate search results to favor YouTube TV. The dispute wasn’t resolved until eight months later, when Google reached an agreement with Roku.  

In 2022, a group of YouTube TV subscribers across four states filed an antitrust lawsuit against Disney, accusing the company of using its market power to unfairly jack up prices on their virtual pay TV service. The antitrust filed in a San Francisco alleges that Disney uses the most-coveted asset in the pay tv ecosystem, ESPN, as well as its leverage over Hulu, to dictate pricing in the virtual pay-TV market. (A judge recently allowed the case to proceed). 

In February of 2023, MLB Network went dark on YouTube TV amid a high-profile carriage dispute, just as the league was getting ready for spring training. 

YouTube TV also got a slap on the wrist last summer from the National Advertising Division saying that the company’s marketing department went to far when it claimed that YouTube TV is "$600 cheaper than cable" and that YouTube TV should abandon those long-standing apples-to-oranges claims. 

New Features

In December, YouTube TV started testing a new feature that lets users easily toggle back and forth between two channels with the push of the "OK" or "select" button on their remote. YouTube TV's app-based experience, which doesn't assign numbers to channels, is perhaps the most un-linear-like among all vMVPDs.

But since many of its customers are linear pay TV refugees, sent to YouTube TV after their small or midsized cable company abandoned traditional video, adopting a few of the old-school popular features might not be a bad idea. 

Other recent updates include experimental “Decreased Delay” and “Build Your Own Multiview” features.

The Decreased Delay feature allows users to reduce the kind of broadcast delay latency issues that plague live sports. Of course, the trade off is that less buffering means more room for errors and glitches that can impact service quality. Users run the risk of more frequent interruptions in order to avoid sports spoilers. 

YouTube TV’s Build Your Own Multiview feature lets viewer select up to four live sports streams for their own Multiview screen. (Previously, Multiview users were limited to preset selection of games). 

The Big Picture

YouTube TV is one of a handful of vMVPDs positioned to actually fill the void as legacy pay-TV operators retreat. 

In fact, analysts at MoffettNathanson have recently wondered if YouTube TV’s rapid growth could be enough to flatten the fast-accelerating rate of cord-cutting. 

On the other hand, there are a whole new generation of FAST services that are creeping up from behind and it’s unclear what constraints, limitations and growth pains they may face in future. 

Watch this space. We’ll be updating with major developments. 

The Justice Department is apparently giving broadcasters some help with one of their top Washington priorities — Big Tech's dominance as an ad platform.

As expected, the DOJ on Tuesday (January 24) said it was filing an antitrust suit against one of the biggest of Big Tech — Google parent Alphabet — over its online ad practices, a move that could lead to Google divesting its ad business and aid TV stations in what the National Association of Broadcasters has called Big Tech’s “stranglehold” on digital advertising and ad rates.

Attorney General Merrick Garland said Tuesday that the suit was necessary to combat Google's 15-year record of anticompetitive, exclusionary and unlawful conduct in the automated ad tech sector to severely weaken, “if not destroy,” its competitors.

Garland said the U.S., as an advertiser, has incurred damages. The complaint seeks compensation, an injunction against challenged practices and divestitures.

According to CNBC, the suit alleges Google “sought to control all sides of the market,” realizing “it could become ‘the be-all, and end-all location for all ad serving,’ ” to the detriment of broadcast and print competitors for ad dollars and eyeballs.

NAB said, through senior communications strategist Alex Siciliano, that it's carefully reviewing the complaint. "For years, broadcasters have been sounding the alarm over the anti-competitive practices of the Big Tech platforms, including Google. Their dominant role in the marketplace has come at a steep price for local news broadcasters, who lose an estimated $2 billion annually by providing their content to these platforms under ‘take it or leave it’ terms. We continue to work with our congressional allies to address these inequities and urge Congress to move swiftly to level the playing field.” 

Reportedly the states of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia have joined the suit.

A Google spokesperson told CNBC: “DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.”

It is the second antitrust suit the DOJ has filed against Google. The first was filed under the Trump administration in 2020 and claimed the company unlawfully maintained its search and search advertising monopoly through exclusionary practices. 

Also: Meta's Targeted Ad System Now Under Court Oversight

Earlier this month, Google critic and DOJ antitrust division chief Jonathan Kanter was reportedly cleared by the Justice Department to work on cases involving Google, something Alphabet had opposed given that past criticism.

As founding partner of the Kanter Law Group, his online biography boasted that he was “a leader in the effort to advocate for antitrust enforcement actions against big tech companies by federal and state authorities.”

Big Tech also wanted Biden-appointed Federal Trade Commission chair Lina Khan to have to recuse herself from antitrust-related Big Tech issues given her past criticisms, but that didn’t happen either.

The Computer & Communications Industry Association, whose members include a Who's Who of Big Tech, found the proposed remedies too much to swallow.

“Competition for advertising dollars is fierce both on and offline, growing even more so as the global ad market evolves with new competitors and technology,” it said. “The government’s contention that digital ads aren’t in competition with print, broadcast, and outdoor advertising defies reason.

“As an association that has supported government intervention in appropriate technology cases in the past, we find this lawsuit and the radical structural remedies that it proposes unjustified,” CCIA said. “Digital services are competing vigorously for advertising dollars on screens of all sizes, and the complaint appears to disregard these dynamics as well as the macro trends of the global ad market.”

Ditto the Big Tech-backed and funded trade group the Chamber of Progress, which was not pleased with the suit.

The chamber argued Google is not the dominant ad market platform DOJ supposes. “Google’s online ad market share is now at an all-time low, and it just laid off 12,000 employees in the midst of a declining advertising market —so this DOJ case seems pretty disconnected from economic reality,” said chamber CEO and former Google exec Adam Kovacevich. ▪️

Finally, the NFL gets a new dance partner to stream another corner of its far-flung TV operations. After many months of wrangling, and the notable bow-out of the world’s most valuable consumer company, Alphabet will pony up $14 billion over the next seven years to show hungry football fans the games they couldn’t watch in their home markets with the “NFL Sunday Ticket” premium package.

That’s $3 billion more, for four fewer years, than Amazon is paying for Thursday Night Football in a deal that started this fall. It’s eight times more than Apple is paying for a very different and far less popular (in the United States) kind of football, Major League Soccer, for access to pretty much every corner of MLS game viewing over a decade. 

Also read: NFL, Google Announce ‘NFL Sunday Ticket’ Is Coming to YouTube TV, YouTube Primetime Channels

This deal, well, it’s a lot for not that much of the NFL video empire. And perhaps it’s about as big as deals will get going forward in the increasingly bubble-y world of TV rights to live sports events. It’s worth asking if we’re finally reaching Peak Sports Rights, just as we appear to have hit the long-predicted Peak TV more generally. 

That said, this appears likely to be a big deal for Alphabet’s virtual MVPD service, YouTube TV, and for Sunday Ticket, which has been under house arrest on the fading DirecTV for far too long. 

YouTube TV has evolved massively on the way to a sector-leading 5 million subscribers. Having the NFL package to market alongside its other entertainment, sports and news offerings will create a useful halo of prestige and breadth of options that should appeal to many potential new customers.   

And given that part of the cost heretofore of subscribing to Sunday Ticket required festooning your domicile with a satellite dish, easy access to an online streaming package should be a big improvement. For a significant subset of NFL fans, it likely will spur signups and maybe even ad deals for YouTube TV itself. That’s certainly part of Alphabet’s value calculus.  

Notably, Sunday Ticket also will be available as part of YouTube’s Primetime Channels, expanding access that could further drive signups. You don’t have to subscribe to YouTube TV to get a full dose of NFL games. For a set of folks who don’t care about traditional cable offerings or, more likely, get them somewhere else, this is good. 

Price could be an issue for the relocated service, though. Under DirecTV, the base service cost nearly $300, with access to Red Zone and fantasy sports programming costing another $100. 

One survey of more than 2,500 regular NFL watchers suggested more than 40% of those who had never subscribed to DirecTV’s version would be up for a streamed Sunday Ticket. That’s promising. 

Also read: Move To YouTube Could Boost Number of NFL Sunday Ticket Subscribers

But price will matter when it comes to actually signing up, especially in a weakening economy. Barely a quarter of survey respondents said they would sign up at the $300 price. Cut it by a third to half, and the likelihood of signing up nearly doubles.  

Certainly, plenty of other signs suggest people are embracing streaming sports with gusto. Comcast has been crowing about the stellar ratings and ad results on Peacock and Telemundo for its Spanish-language streams of soccer’s World Cup. 

Even the chronically uninteresting ESPN Plus now claims 24.3 million subscribers. That’s up a ringing 42% in a year, though at least partly that’s because of ESPN Plus’s presence in the Disney Plus/Hulu bundle, which basically throws in the sports service for free. 

Sinclair’s struggling skein of 19 regional sports networks, Bally Sports, just did its own streaming deal, with YouTube TV competitor FuboTV. As Next TV’s managing editor pointed out, the deal “does little to clarify” the parlous perch upon which Bally sits amid cable TV’s cord-cutting limbo. But until bankruptcy overtakes Bally Sports, Fubo has another notable programming source for its marketing as the sports fan’s vMVPD. 

Not to be lost in the Alphabet-NFL deal is this: it also marks the limits of Apple’s free-spending habits for Apple TV Plus. Apple launched Friday Night Baseball last April with MLB. In February, it starts that very interesting, 360-degree rights deal with MLS. Neither costs anything like the Sunday Ticket deal, but both provide Apple with many of the same benefits on a much smaller scale. 

Apple did spend months dickering with the NFL about Sunday Ticket, and was considered the frontrunner to win the rights for much of that time. 

Then, a few days before this week’s announcement, Apple executives decided they “don’t see the logic” behind spending Two Large (or more; reports ranged as high as $3.5 billion) on a small slice of the NFL pie. That’s a harsh assessment that might give others pause when they’re pondering further sports rights deals. 

And it’s not like Apple doesn’t have the money to do a deal this dear.  

The company’s market valuation, even in this market, tops $2.1 trillion. It generated $90 billion in revenues in its last quarter. And with Apple TV Plus, it has quickly built a reputation in Hollywood as the deepest pocket in town.   

But now we know how deep that pocket really is. 

Perhaps Apple executives (and Warner Bros. Discovery’s CEO David Zaslav, who has voiced similar reservations) aren’t completely sold on the long-term value of live sports, at least at this kind of price. 

Why spend billions of dollars to rent someone else’s content that has virtually no market value two days after it’s created? Maybe they decide to splash out more money elsewhere for their streaming brand, or do sports deals at a more reasonable price, or better return on investment.

Zaslav has mused publicly in recent weeks about WBD’s deal with the NBA, which should be up for renewal discussions soon. Given WBD’s many other financial challenges, does it want to keep propping up TNT with another expensive NBA deal? Would the NBA have a future place on the reshaped and renamed Max streaming service? What’s the value proposition for other live sports on other services in the future, and what does that mean for broad general streaming services? 

It’s too soon to say that Peak Sports Rights has arrived. Until we get another round of deals, like the soon-to-expire NBA and the Pac-12 Network deals, we won’t have the market comps to make any judgments. But for leagues that have counted on endlessly higher prices for their TV rights, the fact that even Apple may have spending limits has to send a chill. ▪️

Perhaps disabusing the video business of the notion that sustained double-digit growth is merely a matter of transitioning models from subscriber to advertising focus, YouTube just reported its slowest quarterly revenue growth in more than two years. 

Alphabet said during its second quarter earnings report Tuesday that YouTube generated $7.34 billion from April - June, up 4.8% year over year. The expansion missed equity investor forecasts of around $7.49 billion.

Consider that in the second quarter of 2021, Alphabet reported 84% revenue growth for YouTube. 

"The 2022 revenue growth rates are presented against particularly tough comps as we lapped the recovery in the second quarter of 2021 from the impact of the pandemic in early 2020," Alphabet CFO Ruth Porat told equity analyst during Tuesday's earnings report. "Going forward, the very strong revenue performance last year continues to create tough comps that will weigh on year-on-year growth rates of advertising revenues for the remainder of the year. In YouTube and Network, the pullbacks in spend by some advertisers in the second quarter reflects uncertainty about a number of factors that are challenging to disaggregate.

Notably, YouTube generated ad-sales expansion of only 5.8% in the second quarter of 2020 amid the sudden onset of COVID-19. 

YouTube ad revenue grew by just 14% year over year in Q1 to $6.87 billion, a dramatic deceleration of growth considering the platform expanded its revenue by 49% during the same period of 2021. 

YouTube missed the consensus forecast of equity analysts by about $600 million in the first quarter.  

"The deceleration in the year-on-year growth rate primarily reflects lapping of the exceptional performance of direct response that we called out in the first quarter of 2021," said Ruth Porat, CEO of YouTube and Google parent Alphabet during Tuesday's first-quarter earnings call. 

YouTube ad revenue was also impacted by Russia's unprovoked invasion of Ukraine, with advertising slowing across Europe. 

More positively, Alphabet reported "substantial growth" for YouTube's subscription businesses, which include YouTube TV and YouTube Music, but it didn't offer numerical specifics. 

Meanwhile, citing Nielsen data, Alphabet noted that YouTube accounts for half of ad-supported viewing time in connected TV among viewers 18 and up. 

And YouTube Shorts, the platform focused on videos 60 seconds in length and, well, shorter is now up to 30 billion daily views, which is about five times as many as the same period a year ago when it launched. 

Alphabet reported total revenue of $68.01 billion, up 23% year over year. 

YouTube generated $7 billion in advertising revenue in the second quarter, its biggest sales quarter ever, rising 84% year-over-year from the pandemic-effected spring quarter of 2020.

Overall, Alphabet, parent company to Google and YouTube, reported Q2 revenue of $61.9 billion, up nearly 62% year, with net income of $18.5 billion. Again, these performances were the company's best ever. 

During Tuesday's earnings call, Google/Alphabet CEO Sundar Pichai called out YouTube Shorts, the company's answer to TikTok, which averaged 15 billion global daily views in Q2, more than double the 6.5 billion it was averaging at the end of the first quarter. 

Meanwhile, Pichai didn't update the customer growth metrics on virtual pay TV service YouTube TV, noting only that he was "also pleased with the progress we are making with YouTube subscription products across Music, Premium and YouTube TV, each delivering a fantastic experience and content for viewers."

With quarterly ad sales $7 billion, YouTube is the second biggest video platform in the world, trailing only Netflix, which generated more than $7.3 billion in subscription revenue in Q2. 

With $6.9 billion in ad revenue in Q4, YouTube temporarily held the "biggest in video" crown at the turn of the year. 

The share of YouTube’s vast audience watching the free, ad-supported video platform on internet-connected TVs has very quickly grown from only around 12% to about 40%, according to a report in The Information, citing unnamed ad tech executives who work closely with Google. 

For comparison, Netflix says that around 70% of its audience streams its programming on connected TVs.

The report comes just days after Nielsen released a revealing infographic, suggesting that YouTube commands the same share of overall U.S. TV usage as Netflix, around 6%.

In March, YouTube’s top product manager, Neal Mohan, said users watching the platform on TVs had increased to 120 million vs. 100 million a year prior. This growth, he said, has switched on a “lightbulb” in the heads of advertisers and media planners about the potential of connected TV marketing. 

Maybe ... a shift is occurring, but there still doesn't seem to be a connected TV revolution at hand in the ad world. 

Google parent company Alphabet said that YouTube generated $6.01 billion in advertising revenue in the first quarter, up 49% year over year. 

The ability to command the more premium ad rates on connected TV vs. categories like mobile has undoubtedly contributed to this growth. 

But according to The Information report, many traditional TV advertisers are still “balking” at moving over ad dollars to YouTube en masse. As the Nielsen graphic revealed, 64% of the total audience is still using linear methods to consume TV.

A shift is indeed occurring— the Interactive Advertising Bureau projects connected TV advertising revenue will increase by 14% in 2021, while traditional television’s share will drop by 5%. 

Meanwhile, eMarketer projected U.S. connected TV ad spend will grow from $8.11 billion in 2020 to $18.3 billion by 2024. 

But these growth projections aren’t being significantly altered by YouTube’s lighting-fast ascendency in the American living room. 

The oranges have once again usurped the apples.

Alphabet said YouTube generated $6.01 billion in ad revenue in the first quarter, a figure that outstripped its Q1 2020 performance by 49%. But the sales figure fell short of the record $7.16 billion generated in subscription sales by Netflix during the first three months of 2021.

Netflix, which actually slipped behind YouTube in Q4 revenue performance, is once again the biggest company in video streaming, comparing the somewhat asymmetrical base performance of these two very different businesses. 

Also Read: How Does Netflix Remain King As New Competitors Chip Away?

But Google’s ad-supported behemoth is actually growing faster—it's nearly 50% year-over-year expansion beat Netflix's Q1-to-Q1 growth of 23.4%.

Once more, YouTube’s ad revenue growth seems to be accelerating—it grew by nearly 47% on a quarterly basis in Q4.

Parent company Alphabet only started breaking out YouTube sales figures in the fourth quarter of 2019. 

Google parent Alphabet didn’t talk about its streaming TV service YouTube TV, or its escalating battle with streaming device maker Roku, on its Q1 conference call April 27. But what it did say about the YouTube internet video service should send shivers down every TV executive’s spine.

On the call yesterday, which was broadcast over YouTube, Google senior VP and chief business officer Philipp Schindler said that YouTube’s Brand business -- which offers content tied to a specific brand, meaning it also attracts higher ad revenue -- has more than 2 billion global monthly logged in users, watching over 1 billion hours of video every day. Think about that for a minute.

LightShed Partners’ senior analyst and partner Rich Greenfield did, tweeting shortly after the Tuesday call that at 1 billion hours, YouTube has 2.5 times more streamed viewing hours than Netflix, which he estimated streams 400 million hours per day. 

“Linear TV’s future is grim at best,” Greenfield tweeted.

That alone should get some TV people nervous, but then Schindler got a little scarier, noting the ad reach that the service has. He first said that Taco Bell saw a 27% incremental reach for its limited time offer campaigns. Kellogg’s Special K campaign’s incremental reach was more than 30%, he said.

Then he got downright terrifying. 

“Historical approaches to reaching audiences through, let’s just say, call it linear TV, don’t really work anymore,” Schindler said. “Advertisers are using YouTube now to reach the audience they can’t find anywhere else. And remember, more 18-to-49-year-olds are actually watching YouTube than all linear TV combined, and brands are also seeing more incremental reach on YouTube compared to TV.”

If there is one thing that will ensure the death of any business, is that the money it depends upon for survival finds another place to go. And Google, after already scarfing up most of the digital ad revenue and all of the search ad revenue in the world over the years, is getting ready to dominate the ad space in branded video content as well. 

Because in the end, it doesn't matter if the kids are watching makeup videos on YouTube, Shadow & Bone on Netflix or the 17th season of Grey's Anatomy on ABC, ad money is going to flow to whatever they are watching. And now it looks like more kids are watching makeup videos. 

Analysts that follow Google and usually concentrate on the Search engine ad growth, are beginning to take notice of the TV implications to YouTube’s success. In a note to clients, Evercore ISI Group analyst Mark Mahaney noted the “tipping over of linear TV ad budgets, some of which we believe are being shifted over to YouTube.”

YouTube, Mahaney added, is at an ad product inflection point with its Direct Response offering and what the analyst noted as a “massive ARPU ‘gap up’ opportunity” given that it monetizes at less than a 10% premium to Twitter.    

Canaccord Genuity Capital Markets analyst Maria Ripps noted that ad revenue rose across the board for the internet giant -- up about 30% each for search and networks and 49% for YouTube.

“YouTube saw robust demand from DR and continued strength from brand spend, and the company remains focused on integrating shopping features given how often users go to YouTube to decide what to buy,” Ripps wrote. “During Q1 Google launched new capabilities for users to purchase items from their favorite creators along with the ability for merchants to place product feeds directly inside video action campaigns.”

What’s even more disheartening is that YouTube’s DR business didn’t even exist three years ago. On Alphabet’s Q4 earnings call, Schindler said it was “one of the largest and fastest growing ad offerings on YouTube.” Paired with TrueView for action, which provides  in-stream video ads that enable advertisers to convert prospects from within the ad via lead generation forms, he claimed it makes it easier for advertisers to unlock opportunities through video campaigns.

On the Q4 call, Schindler said that 60% of TrueView for action customers were new to YouTube and that the company more than doubled the number of active advertisers using the service in the first six months of 2020.

On Tuesday’s conference call, Schindler said the DR business is “just getting started.”

He noted that Calvin Klein tested out the shopping capabilities of the BrandConnect program, and saw a 200% lift in brand search, selling out multiple products.

“For merchants, they can now bring their product feeds directly into their video campaigns and I think we are still scratching the surface on what’s possible really with commercial intent on YouTube,” Schindler said. 

So I’m beginning to think that YouTube TV, which everybody thought was going to kill pay TV when it first started offering 70 channels for $35 per month, doesn’t mean that much to YouTube as a business. It’s had to raise its prices first to about $40 in 2018, then to $50 in 2019 and last June to about $65 per month,  only has about 2 million subscribers, making it about the size of Sling TV, and maybe if it can’t get what it wants from Roku -- which according to reports is along the lines of giving special search privileges to and access to data for the separate YouTube app, that’s no skin off its back. Roku has accused Google of “anti-competitive practices,” which should rattle the internet giant a bit in the current political climate, but it seems that even if YouTube TV lost a million or so subscribers minus a Roku deal, it wouldn’t matter much. There are 2 billion people watching 1 billion hours of how-to videos and infomercials on YouTube each day, and the YouTube app is still available on the  Roku lineup. So in the long run, Google will eventually get what it wants either way. 

If you’re having trouble telling Android TV from the profusion of other Alphabet-connected brands (YouTube, YouTube Premium/Red, YouTube TV, Chromecast, Android mobile … you get the idea) involved in distributing some flavor of content onto some set of devices, don’t feel bad. 

Shifts in strategy, focus and name have been common over the years at Alphabet (also a name change), as Google continues to diversify far beyond its search origins. So too what’s happening with Android TV.

But the video operating system now called Android TV is a six-year-old spinoff of Google’s Android mobile operating system, which runs about three in four handsets in the world. Given away for free, the mobile version is a crucial part of Google’s dominance in online advertising dollars. 

Android TV is pushing for the same sort of omnipresence, nudging its way into seemingly every corner of the global TV ecosystem. 

Android TV’s quest for world hegemony likely won’t be completely successful: the Chinese government would prefer its citizens’ TV-delivery systems not be run on U.S.-based software, protecting a key market for Huawei’s Harmony OS, according to Rethink Technology Research. 

But Android TV is making inroads pretty much everywhere else outside China. 

In the pay TV business across North America, Europe and Latin America, operators have turned to Android TV en masse as a simple, low-cost solution for meshing managed services with access to popular OTT platforms. 

Android TV combines the vast flora and fauna of the Google Play Store, where users can find Netflix, Hulu, Amazon Prime Video, Disney Plus … or pretty much whatever streaming service they’re looking for. Android TV also combines the voice capability of Google Assistant and is testing a new system that will give streaming services the option of letting new subscribers sign up for their platforms on Android TV.

In the pay TV market, Android TV must contend with RDK, or Reference Design Kit, created by a consortium of big cablers such as Comcast, Cox, and Liberty Global. 

Also Read: Android TV to Become Dominant Global Pay TV Set-top Platform: Research Group

RDK would in turn prefer open specifications in their devices’ tech stacks. The consortium recently announced the RDK stack is on 60 million devices, up 20% in a year.  Rethink projected that RDK will continue to dominate the U.S. market the next five years, with a 57-percent share.  

Nonetheless, Rethink suggests Android TV is on its way to becoming the dominant pay TV set-top operating system worldwide, even in Asia-Pacific, where Rethink projected Android TV-based devices would pass 160 million units over the next five years. As the sector consolidates, Android TV is well positioned to thrive. 

Building a Presence

Over the past three years, Android TV has built that significant presence as a middleware solution for set-top boxes in traditional pay-TV. In North America, for example, AT&T TV—the recently launched streaming service that looks a lot like traditional pay-TV and was designed to attract some of the 1 million customers who have fled DirecTV and U-verse just in the first quarter—comes with a user-installable set-top box that uses Android TV.

Meanwhile, National Cable TV Cooperative (NCTC)—which represents 750 small and mid-sized cable operators—just announced deal with Korea’s Kaon Media for a set-top box built around Android TV.

Also Read: Android TV Infiltrates Cable Co-op NCTC Through Kaon Set-top Deal

Beyond the inroads carved by the “operator tier” version of Android TV in the global pay TV market, the middleware is carving out a big niche in the direct-to-consumer connected TV realm, infiltrating everything from OTT devices to smart TVs to video projectors. 

Android TV is the leading smart TV operating system globally, controlling around 40% of the world market, according to Statista. And it continues to catch up to Roku and Amazon Fire TV in the area of connected TV devices. 

TiVo is basing its big entry into the OTT device market, the TiVo Stream 4K, around Android TV. But the middleware has been showing up in streaming boxes like Dish Network’s AirTV for several years. 

New Devices

Meanwhile, Google is developing a new version of its Chromecast OTT-streaming device based on Android TV. That marks a big change for Google/Alphabet. It developed Chromecast even before Android TV’s predecessor came along. It was intended to run small, cheap streaming devices that could stream video “cast” from a user’s phone onto a TV screen.

The new Chromecast/Android TV mashup, branded "Chromecast with Google TV", reportedly also would get a remote, instead of relying on users’ phones.

Google debuted Sabrina, a new HDMI dongle, at retail on Sept. 30 with a $49.99 price point.

Chromecast has a moderate 11% share of the OTT streaming market, lagging well behind industry leader Roku and Amazon’s Fire devices. 

That’s still better than Android TV in the direct-to-consumer OTT market, but the new device would bring not just that integrated access to traditional networks and OTT apps such as Netflix and YouTube (of course) but also voice control over remotes, a hot trend.

Beyond streaming boxes and smart TVs, companies including Chinese electronics giant Xiaomi are building Android TV into inexpensive video projectors, perhaps a first beachhead in another up-and-coming CE sector where the Google OS could potentially build a dominant position as other makers come in.

Also Read: Android TV Projector Gets Netflix Support for First Time

As all this proliferation of Android TV is happening, Google is still evolving the Android TV interface, in ways that further integrate the gargantuan bank of ad-supported and other content on YouTube among the big streaming services and the more traditional networks available on everyone’s STB. The updated interface now features pandemic-friendly YouTube content focused on COVID-19 news, things to do at home such as cooking and fitness, and free ad-supported movies. 

Android TV also now has HDR support for CBS All Access. The built-in Chromecast component of Android TV lets users cast music services like Spotify in the background as they look for something to watch. 

Also Read: Android TV Adds New YouTube Search Features

Hollywood long kept apart the worlds of film, TV and “home entertainment,” never mind the online-streaming upstarts. Increasingly, hastened by the pandemic, Hollywood’s different windows are facing unprecedented smearing of those differences. 

Is an Android TV-based Chromecast device Google’s answer to providing users all of the content out there from Hollywood and far beyond? 

The Justice Department could file an antitrust suit against Google (and YouTube) parent Alphabet as soon as this month, according to The New York Times.

Google's market power and position as the dominant search engine have drawn record fines in Europe, but it has pretty much avoided similar treatment at home. 

RELATED: DOJ's Delrahim Seeks Examples of Online Platform Anticompetitive Conduct

Attorney General Bill Barr signaled at his Senate confirmation hearing that if he got the job he wanted to investigate Big Tech and how it got that way "under the nose of antitrust enforcers." The Times reported that Barr was pushing Justice to file by month's end, while others in the department were suggesting they needed more time to build their case.

President Donald Trump and the Justice Department separately have set their sites on regulating content on social media platforms as Silicon Valley draws unprecedented attention from Washington to match its unprecedented market caps and power over information. 

At a July 29 House Judiciary Committee hearing on whether Google and other giant edge providers are using their power anticompetitively, Alphabet CEO Sundar Pichai said Google is in a long tradition of American innovation, "building products that are helpful to American users in moments big and small." He talked about small businesses using Google to grow. 

As to whether Google is dominant, he said: "Google operates in highly competitive and dynamic global markets, in which prices are free or falling, and products are constantly improving. … People have more ways to search for information than ever before — and increasingly this is happening outside the context of only a search engine." he asserted.

It looks like the Justice Department does not see it that way.

YouTube is talking to subscription OTT providers about marketing their services in a model similar to Amazon Channels and Apple TV Channels.

According to The Information, the talks have been held over the previous several months, and it’s unclear as to what in the way of actual dealmaking has come out of them.

Related: YouTube TV Surpasses 2M Subscribers

Amazon has since 2015 let its Prime Video customers sign up for hundreds of OTT subscription services ranging from HBO to Showtime to CBS All Access through the Amazon platform, pocketing a portion of the subscription revenue while handling the customer relationship.

Apple recently launched its own version of that model called Apple TV Channels.

It’s believe that Amazon and Apple are collecting between 30% - 50% of subscription revenue from each transaction.

The Google-owned video platform now has a growing subscription model of its own to prop up such a business.

Google/YouTube parent company Alphabet, during its fourth-quarter earnings call last week, said that it now has 20 million paying customers combined for subscription services YouTube Music and YouTube Premium. Meanwhile, it also said that virtual MVPD YouTube TV has surpassed 2 million subscribers.

Alphabet today announced today that its Google Fiber ISP division will no longer offer TV service to new customers and will instead market virtual pay TV platform fuboTV.

“As we return our focus to where we started—as a gigabit internet company—we’re also ready to challenge the status quo, to finally come right out and say it: customers today just don’t need traditional TV,” reads a Google Fiber blog post. “The best TV is already online. And we want to help you watch it, in the ways that work best for your budget and your own viewing preferences.”

Google Fiber bundled around 150 high-definition and standard-def channels, including ESPN, along with a 2-terabyte DVR that could record eight shows at once. In 2016, Google Fiber announced a major retrenchment, laying off 8% of its staff and pausing its buildout in 11 cities, as VentureBeat noted.

Google Fiber had 68,715 TV subscribers at that time out of a total base of 453,000 customers taking broadband services. Customers could bundle 100 Mbps broadband and TV service for around $130 a month, with a $300 installation fee.

Google Fiber is also phasing out its 100 Mbps service and is only 1 Gbps products in the 18 regions it still operates.

As for fuboTV, it’s base-priced at $55 a month, offering over 100 channels, some of them with 4K, and 500 hours of virtual DVR storage.

Google Fiber also recently entered a deal with Google to sell virtual MVPD YouTube TV to customers when they sign up for broadband service.

“This is particularly exciting for sports fans—fuboTV offers more than 35,000 live sporting events each year,” Google Fiber said in its post. “And you can also watch popular TV shows, movies and news on fuboTV—their base package alone has more than 100 live channels and more than 30,000 TV episodes and movies on demand every month. You also get cloud DVR and the ability to stream simultaneously on multiple screens.

Already an advertising juggernaut, generating $15 billion in ad revenue in 2019, YouTube has finally found traction in the subscription business.

During parent company Alphabet’s fourth-quarter earnings call Tuesday, the company said that virtual pay TV service YouTube TV has surpassed 2 million subscribers. 

The issuing of that imprecise figure would seem to position YouTube TV behind market leaders Sling TV, from Dish Network, and Hulu Live TV, each of which had around 2.7 million users as of the end of the third quarter.  

Alphabet also said that its subscription services YouTube Music and YouTube Premium now collectively have more than 20 million users. Combined, the company added, YouTube now has a $3 billion annual run rate from subscriptions and other “non-advertising revenues.”

Related: Hulu Live and YouTube TV ‘Exceptionally Strong’ in Q4, Drive Up Miserable Pay TV Cord Cutting Numbers

On Monday, equity research firm MoffettNathanson published a report indicating that the “exceptionally strong” customer growth of YouTube TV and Hulu Live in the fourth quarter offset another miserable quarter of retraction for linear pay TV. The rate of recession for the pay TV ecosystem was 6.8% without the vMVPDs factored in, and only 3.5% with them included. 

Sens. Mark Warner (D-Va.) and Amy Klobuchar (D-Minn.) have called on the CEO's of Twitter and Alphabet (Google) to follow Facebook's lead and voluntarily institute political ad disclosures the legislators are attempting to legislate.

That came in a letter Monday (April 9).

Facebook announced those changes, along with others, in advance of CEO Mark Zuckerberg's testimony before two powerful congressional committees this week. Twitter has also made a political ad disclosure pledge, which the legislators acknowledged.

Related: Zuckerberg Says Facebook Did Not Do Enough to Stop Fake News

Warner and Klobuchar are the co-sponsors of a bill, the Honest Ads Act, which would legislate such enhanced disclosures, but they want edge providers to get ahead of that curve. Zuckerberg also announced his support for the Honest Ads Act, which would mandate similar disclosures on his edge competition.

That bill would essentially apply the same kind of political ad disclosures that currently apply to print, broadcasters and cable operators--importantly who is paying for the ads--to the edge. It would also require there to be a public record of the ads published from an advertiser if it totals more than $500 in a year. Lastly, it requires best efforts to prevent foreign meddling in elections.

Separately, the Federal Election Commission is also contemplating expanding those disclosure requirements to online political ads.

Alphabet, Google’s parent company, has tapped a cable industry vet to run Access, the unit that operates the Google Fiber and Webpass businesses.

Dinesh (Dinni) Jain, most recently COO of Time Warner Cable, started as CEO of Access today, the company announced in this blog post.

Jain takes on that role almost seven months after Gregory McCray, the former CEO of Access, stepped down after just five months on the job. McCray had come on board to replace Craig Barratt, who was named CEO of Barefoot Networks about a year ago.

As the head of Access, Jain will lead the way from the company’s headquarters in California.

Jain, an exec who is also late of what used to be Insight Communications (acquired by TWC in 2012) and NTL (now part of Virgin Media/Liberty Global) in Europe, is also coming on board following a recent string of tweaks to Alphabet’s strategy for Access.

In the fall of 2016, Google Fiber hit the pause button on its ambitious expansion plans so it could concentrate in its current deployments and pursue less expensive wireless alternatives following the acquisition of Webpass.

RELATED: Capex at Alphabet's 'Other Bets' Continues to Fall 

Last week, Access confirmed that Webpass was winding down operations in Boston following a review of its business there, while continuing on in markets such as Denver, Seattle, Chicago, Miami, Oakland, San Francisco, and San Diego.

RELATED: Google’s Webpass Backing Out of Boston

Cathy Fogler, another vet from the cable industry, joined Access last year to head up sales and marketing.

Capital spending at “Other Bets,” the unit of Alphabet containing Google Fiber, Nest and Verily, fell sharply for 2017 amid shrinking spending for fiber-fed broadband services.

Accrued capex at Other Bets was $507 million, down from $1.4 billion in 2016, “primarily reflecting a reduced investment in Fiber,” Ruth Porat, CTO of Google parent Alphabet, said Thursday on the company’s Q4 call.

That reduced investment follows the company’s decision to pause expansion of Google Fiber as it focuses on existing deployments and less expensive wireless broadband alternatives. This week, the company also confirmed that it is winding down operations of Webpass, the wireless broadband company acquired in 2016, in Boston. Other Webpass market deployments are not affected.

RELATED: Google’s Webpass Backing Out of Boston

Revenues at Other Bets for Q4 hit $409 million, up from $262 million in the year-ago quarter. The unit posted an operating loss of $916 million, narrowed from $1.08 billion.

For full-year 2017, Other Bets revenues were $1.2 billion, up 49%, driven by Nest, Fiber and Verily, while the operating loss for 201 was $3.4 billion, trimmed slightly from a loss of $3.6 billion in 2016.

Porat noted that Nest “turned in a strong holiday performance,” with Nest products also becoming available in 12 new countries in 2017, more than double the number from 2016.

Turning to YouTube TV, Google did not announce a subscriber figure (a CNBC report puts it at about 300,000). But Sundar Pichai, Google’s CEO, talked up YouTube TV new multi-year partnership with Major League Soccer’s LA Football Club.  

YouTube TV is on board as the “Official Live TV Partner” and “official Video Partner” of the club, and will be the exclusive home for all locally televised English-language LAFC matches. YouTube TV will also carry the team’s nationally televised matches on ESPN, Fox and FS1. LAFC jerseys will also don the YouTube TV logo.

In addition to showing locally televised LAFC matches on a designated YouTube TV channel (they will be geo-fenced and offered only in the L.A. market), the broadcasts will also feature a 30-minute pre- and post-game show from the YouTube TV Studio set at Banc of California Stadium.

Turning to Google’s hardware business, Pichai said device shipments in Q4 more than doubled year-over-year, and that the company sold “tens of millions” of products such as Google Home, the Google Home Mini, Google Home Max and Chromecast streaming adapters in 2017.

YouTube this week also expanded its YouTube Go app to more than 130 countries. That offering lets users download and view videos (and share them with others using device-to-device links) when there is a limited or slow data connection. This video offers more detail about that offering: 

Capital expenditures for “Other Bets,” the unit of Alphabet that contains Google Fiber, fell significantly in Q3 2017 – to $77 million, from $324 million in the year-ago period.

The big change in spending follows a decision by the company to hit the pause button on Google Fiber’s original, ambitious expansion plans, and as it puts more emphasis on less expensive wireless broadband alternatives.

RELATED: Google Fiber Pauses Expansion Plans, Laying Off Some Staff

That shift in strategy also followed Google Fiber’s acquisition of Webpass, a wireless broadband company, in the fall of 2016. Google confirmed last week that Charles Barr, founder of Webpass, had left the company, but didn’t elaborate on the reason for his departure.

“Webpass has a great model for serving customers with a variety of access technologies. They've grown their customer base over the past year since Fiber acquired them, and we're excited to continue that growth,” a Google spokesperson said.

RELATED: Google Fiber Won't Put TV on the Menu in Two New Markets

Other Bets, which also includes Nest, posted Q3 revenues of $302 million, up from $197 million a year earlier, and an operating loss of $812 million, narrowed from $861 million.

Jan Dawson, founder and chief analyst at Jackdaw Research, summed up the capex situation at Other Bets in this tweet:

In case you’re wondering how Alphabet feels about Google Fiber at this point… pic.twitter.com/iYcAlhuBot

— Jan Dawson (@jandawson) October 26, 2017

Google confirmed that Cathy Fogler, a cable industry vet late of MSOs such as Charter Communications and AT&T Broadband, has been named head of sales and marketing at Google Access.

Google Access is a unit of the company that operates Google Fiber, the provider of broadband, voice and video services, as well as Webpass, the wireless broadband company that Google Fiber acquired in the fall of 2016.

RELATED: Google Fiber’s Webpass Sets Seattle Service Launch

Google is not elaborating on Fogler’s role at Google Access, but said Fogler replaces Christina Wire, who has moved to YouTube in a VP capacity.

Before joining Google Access, Fogler, a highly regarded exec and well-known name in cable industry circles, was a VP at Hitachi Consulting; a co-founder of CAfrica Sports, a U.S.-based TV company that provides premium sports programs through a network of free-to-air broadcasters in sub-Saharan Africa, and was a consultant at Sand Cherry Associates.

Fogler is also a former exec at Charter, where she was VP and GM of video services; was VP of video product management at Adelphia Communications, and was director of video product management at AT&T Broadband (now part of Comcast).

Another former Charter exec, Marwan Fawaz, is also at Google, serving as CEO of Nest. Fawaz was also in charge of Motorola Home before Google sold it to Arris in 2013.

RELATED: Marwan Fawaz Named CEO of Nest

Nest and Google Access are both part of the “Other Bets” division of Alphabet, Google’s parent company.

Alphabet’s Access division and its Google Fiber unit are again in search of a new leader following the resignation of Gregory McCray just five months after he took the post, Bloomberg first reported. 

Update: A Google spokesperson confirmed that McCray had stepped down and that a search for his replacement is underway.

McCray was named CEO of Alphabet’s Access division in mid-February, taking over a role previously held by Craig Barratt, who had resigned that post last fall and is now CEO of Barefoot Networks, a maker of fast, programmable Ethernet switch chips that counts Google among its financial backers.

RELATED: Google Fiber Taps New Leader Amid Restructuring 

McCray, previously was CEO of Aero Communications and a member of the CenturyLink board of directors, had taken the helm of Alphabet’s Access unit as it paused expansion plans for Google Fiber, concentrated on current deployments, and placed a greater emphasis on more cost-effective wireless broadband alternatives that included WebPass, a company acquired by Google last fall.

RELATED: Google Fiber Pauses Expansion Plans, Laying Off Some Staff

“We are committed to the success of Google Fiber. The team is bringing gigabit connections to more and more happy customers,” Alphabet CEO Larry Page said in a statement. “Fiber has a great team and I’m confident we will find an amazing person to lead this important business.”

Google Fiber is part of Alphabet’s “Other Bets,” a unit that emphasizes longer-term projects.

RELATED: Bigger Revenues, Losses at Alphabet’s ‘Other Bets’ in Q1

“We’re working to connect more people to abundant access, on networks that are always fast and always open. It’s a mission that we're fully committed to as a Google Fiber team,” a Google Fiber spokesperson said in a statement.

Gregory  McCray, CEO of Alphabet Access, the unit that oversees Google Fiber, has been appointed to the board of Adtran, the Huntsville, Ala.-based network equipment and software provider.

Adtran said the addition of McCray will help the vendor as it focuses on expanding Gigabit-class broadband speeds and supporting other areas such as smart cities, the Internet of Things and software-defined networking.

In February, Alphabet has tapped Gregory McCray as CEO of its Access division, taking over a role previously held by Craig Barratt and coming on board amid a restructuring at Google Fiber and a shift in focus toward less expensive wireless-based broadband alternatives.

RELATED: Google Fiber Taps New Leader Amid Restructuring

Prior to joining Alphabet, McCray was CEO of Aero Communications, chairman and CEO of PipingHot Networks, and an exec at Lucent Technologies. He is also a former board member of CenturyLink Communications.

“Over the past decade, the telecommunications market has undergone several fundamental shifts in terms of how networks are designed, services are developed and what types of organizations deliver those services. Greg brings tremendous management and international experience that will greatly benefit our team as we look to leverage these shifts to create shareholder and organizational value,” Thomas Stanton, chairman and CEO of Adtran, said in a statement. “The pace of change in our industry has accelerated, requiring more nimble and flexible approaches as we continue to drive innovation, expand our reach and transform the way people live, work and play. I believe that this is a perfect time for someone of Greg’s vision and experience to join our board.”

Other Bets, the unit of Alphabet that includes Google Fiber and longer-term projects, saw revenues rise and losses widen in Q1 2017.

Q1 revenues came in at $244 million, up from $165 million in the year-ago quarter, paired with net loss of $855 million, versus a loss of $774 million a  year earlier. The bulk of revenues for Other Bets came way Nest, Verily and Google Fiber, Ruth Porat, CFO of Alphabet and Google, said on Thursday's earnings call.

Last year, Google Fiber put a pause on market expansions as it concentrates in existing markets and pursues new wireless-based alternatives

RELATED: Google Fiber Pauses Expansion Plans

Google’s push into virtual reality and OTT TV (via the new YouTube TV service) were among the topics that came up on the call.

Sundar Pichai, CEO of Google, said more than 50% of the time consumers spend in the company’s new Daydream mobile VR platform is for video consumption, and that YouTube VR for Daydream is the number one app on the platform in terms of time spent. Google launched the Daydream View headset last November.

Google launched the Daydream View headset last November, and Pichai preached patience on how long it will take for VR to generate mainstream adoption.

“Technically, we are making the breakthroughs are needed,” he said later, noting that Daydream is doing well with early adopters of VR technology.

RELATED: Google Daydream View Hits Stores Nov. 10

Pichai also talked up the new advertising potential presented by YouTube TV, the mobile-focused virtual MVPD service that went live in handful of markets earlier this month.

“The delivery of ads on TV has also not evolved at the same speed as the delivery of ads and media content on the Internet,” he said. “We think we have a significant opportunity to improve that experience, especially for advertisers…across these surfaces.”

Milo Medin and Dennis Kish, two top execs at Alphabet Access unit, are leaving the division but will be staying on at Alphabet, Google’s parent company, in different roles, Bloomberg reported Thursday.

Milo Medin has been serving as vice president of Access, and Dennis Kish, a former Qualcomm exec, as president of Google Fiber. Earlier this week, Medin was one of 29 members named to the FCC’s new Broadband Deployment Advisory Committee, which plans to hold its first meeting April 21.

Google has been asked for further comment, but Bloomberg said an Access official confirmed the changes.

Update:A person familiar with the situation confirmed Friday that Medin and Kish are leaving Alphabet's Access division. 

Bloomberg said word of the changes involvign Medin and Kish were announced at a meeting on Thursday by Gregory McCray, who was named CEO of Alphabet’s Access division, which includes Google Fiber, in February. McCray succeeded Craig Barratt, who resigned that post last fall and was recently named CEO of a Google-backed programmable Ethernet switch chip startup called Barefoot Networks.

RELATED: Google Fiber Taps New Leader  Amid Restructuring 

The reported changes at Access come amid significant changes at Google Fiber, including a decision to hit the pause button in targeted expansion markets as it continues to sign up customers in existing markets, and as the unit pursues less expensive wireless technology options following itsacquisition of Webpass.

RELATED: Google Fiber's Webpass Debuts in Denver 

Google Fiber has also pulled back a bit in some of its existing markets as it weighs its technology options, as the company recently issued refunds to some people in Kansas City who had signed up to get service after the company decided not to expand to their neighborhoods, at least for now.

RELATED: Google Fiber Ended 2016 With 84,232 Pay TV Subs: Study

“In order to focus our efforts and resources, we’ll be slowing construction in some areas until we can layer in the new deployment models we’re developing,” Google Fibertold The Kansas City Star, adding that it is looking to add customers in areas such as Raymore and central Overland Park. 

Google Fiber and the Access unit of parent company Alphabet has a new CEO, who is coming on board amid the move to a more decentralized structure that will affect hundreds of employees while enabling the division to remain committed to its current batch of cities and push into a small group of new ones.  

On the leadership front, Alphabet has tapped Gregory McCray as CEO of its Access division, which includes operations of Google Fiber, which is building out FTTP networks that support gigabit broadband, voice and TV services.

McCray, who has been serving as CEO of Aero Communications and on the board of CenturyLink, takes over in the role previously held by Craig Barratt, who has since resigned that post and was recently named CEO of Barefoot Networks, a maker of fast, programmable Ethernet switch chips that counts Google among its financial backers. Late last year, The Information reported that CenturyLink was a “potential acquirer” of Google Fiber.

RELATED: Building Fiber Networks: Difficult and Lame?

“Google Fiber has been instrumental making the web faster and better for everyone — something I’ve been passionate about my entire career,” McCray said, in a statement. “I’m thrilled to lead Access as we continue in our mission to connect more people to abundant access, on networks that are always fast and always open.”

McCray heads up Access following a recent decision to pause Google Fiber’s expansion plans as it concentrated on current deployments and explored less expensive wireless broadband alternatives.  

 RELATED: Google Fiber Pauses Expansion Plans, Laying Off Some Staff

“Google Fiber remains focused on our customers and cities. We want to bring Google Fiber to customers faster, so we’re focused on making deployment more efficient and less intrusive,” a Google Fiber spokesperson said. “We’re thrilled that Greg has agreed to join as CEO, to drive this innovation and to grow the business.”

The Google Fiber team is moving to a more decentralized structure that will allow for more innovation to come from the field, but a move that will also result in hundreds of employees shifting into new roles in Google and Alphabet, a person familiar with the matter said, confirming a story first reported by Bloomberg.

The new structure, the person added, will likewise mean that Access will look a bit more like a startup again, with a focus on innovations designed to improve business results and service velocity.

Google Fiber, the person added, will also look to serve existing subscribers and add new ones in the current cities, and is now in position to push ahead with previous plans to enter new cities such as Huntsville, Ala.; Louisville, Ky., and San Antonio, Texas.

RELATED: Google Fiber to Ride Muni-Owned Huntsville Network

Cities still on Google Fiber’s list for “potential” build outs include Dallas, Texas; Jacksonville, Fla.; Los Angeles, Calif.; Oklahoma City, Okla.; Phoenix, Ariz.; San Jose, Calif., Tampa, Fla.; and Portland, Ore.  

Cities supported by Webpass, the wireless broadband company acquired last fall by Google Fiber, include Boston; Chicago; Miami, San Diego, San Francisco, and Oakland.

 Craig Barratt, the former head of Alphabet’s Access unit, has been named CEO of Barefoot Networks, a maker of speedy, programmable Ethernet switch chips that counts Google among its backers.

Barratt is taking the helm at Barefoot Networks following Google Fiber’s decision to pause its expansion plans and concentrate on current deployments as it continues to explore less expensive wireless broadband alternatives.  At the time, Barratt announced he was stepping down as CEO of Access but staying on to continue as an advisor at Alphabet, Google’s parent company. Prior to Google/Alphabet, Barratt was president of Qualcomm Atheros.

RELATED: Google Fiber Pauses Expansion Plans, Laying Off Some Staff

He is joining Barefoot Networks amid the development of Tofino, a 6.5 Tbps Ethernet switch chip, which is in sampling mode, and Capilano, a software platform.

"I'm excited about Barefoot's vision to transform networks by enabling programmability in high-performance switching," Barratt said in a statement. "I'm delighted to join the team and to help them build on the incredible progress they are making in achieving that vision."

Barefoot launched in 2016 after spending two years in the product development phase. It’s backed by Google, Goldman Sachs Principal Strategic Investments, Alibaba, Tencent, Sequoia Capital, Lightspeed Venture Partners, and Andreessen Horowitz. It has raised about $155.35 million, according to CrunchBase.

Building a fiber network from scratch isn’t just a difficult, prodding process, but apparently doesn’t possess enough pizzaz for the liking of Alphabet’s top exec, according to an in-depth Bloomberg story focused on how CFO Ruth Porat is trying to bring more financial discipline to the company, known for its array of money-losing “moonshot” projects, along with passages on why Alphabet’s been changing its tune about Google Fiber.

Bloomberg, citing former employees of the company, said Alphabet CEO Larry Page became frustrated with Google Fiber’s lack of progress as it was mired in the expensive process of seeking and gaining permits as well as the construction.

RELATED: Alphabet CFO: Google Fiber ‘Very Committed to Growth’

“Larry just thought it wasn’t game-changing enough,” a former Page advisor told Bloomberg. “There’s no flying-saucer shit in laying fiber.” Of course, Altice USA might disagree, though it’s not building its all-fiber upgrade from scratch.

Those reported details emerge weeks after it was confirmed that Google Fiber was tapping the brakes while also shifting more emphasis onto speedy, and potentially less expensive wireless broadband technologies. While Google Fiber has put its plans to deploy in a batch of potential rollout cities on the backburner, it remains committed to expanding and growing in its existing footprint. Tied in the company also announced then that Craig Barratt, SVP of Google parent company Alphabet and CEO of the company’s Access unit, would step down but continue as an advisor.

Google Fiber Pauses Expansion Plans, Laying Off Some Staff

Bloomberg also reported recently that Jonathan Rosenberg, a company vet and former Excite@Home exec, has been named a counselor to the company’s Access unit as it tries to get a grip on the future of Google Fiber.

Report: Alphabet Taps Fiber Troubleshooter

While I’d agree wholeheartedly that building networks isn’t easy – the telcos and cable operators were telling Google Fiber exactly that from Day 1 – I’d add that Google Fiber does deserve credit in bringing excitement and some dazzle to the business of broadband, while also hitting the incumbent providers with a much needed scare that put a jolt into their capacity upgrades.

And the story of Google Fiber/Access isn’t over, of course, as it pursues new (more exciting?)  wireless options.

[Image source: Wikimedia Commons]

Alphabet has tapped company vet – and former Excite@Home exec – Jonathan Rosenberg to a counselor to the company’s Access unit as it tries to get a grip on the future of Google Fiber, Bloomberg reported.

Google Fiber declined to common on the report, but moving Rosenberg (pictured) into that slot would follow confirmation that Craig Barratt, CEO of Access, was stepping down from that role and into an advisor role, and as Google Fiber pauses its ambitious expansion plan to instead focus on existing deployments and the use of potentially less expensive wireless broadband technologies.

RELATED: Alphabet CFO: Google Fiber ‘Very Committed to Growth’ in Existing 1-Gig Cities

Bloomberg said Rosenberg, a trusted advisor to Google co-founder and Alphabet CEO Larry Page, was tapped to help Google’s robotics division in early 2015.

Per his Linked In profile, Rosenberg joined Google in 2002 to help then-CEO Eric Schmidt’s team build and run the company’s product and marketing organizations, and oversaw the launch of products such as Adwords.

He also served as an exec of Excite@Home, the MSO-backed venture that pioneered cable’s move into broadband but filed for bankruptcy in 2001. Milo Medin, who has had a major role at Google Fiber, is the former CTO of Excite@Home

RELATED: Door Slams on At Home

Prior to Excite@Home, Rosenberg was an executive producer at Apple. 

Google Fiber has hit the pause button when it comes to expansion, but reiterated that it will continue to push ahead and expand in its current batch of markets.

“We remain very committed to growth across those [existing] cities,” Ruth Porat, CFO of Google parent company Alphabet, said Thursday during the company’s Q3 earnings call.

Google Fiber was “very active in a lot of cities in the third quarter alone,” she added. “We rolled out four new cities, so that brings us to 12 cities across the U.S. where we’re deployed, in construction, or in development, and we’re making great progress in those cities.

Porat’s comments come just days after Google Fiber confirmed that it will temporarily halt expansion plans in “potential’” as it refines its deployment and technology approaches and continues to emphasize a future paved by new speedy (and less expensive) wireless platforms. Craig Barratt, CEO of Alphabet’s Access unit, is also stepping down from that role but staying on as an advisor.

RELATED: Google Fiber Pauses Expansion Plans 

“When you go back to the initial impetus for creating the business, it was the founders' view that there's a sizable opportunity given the need for abundant connectivity on networks that are always fast and always open, and we do continue to be committed to that vision,” Porat said, noting that the company has achieved “some important breakthroughs in new technologies,” particularly around wireless.

“We wanted to focus on the potential with these efforts before we reaccelerate deployment,” she added.

Google Fiber doesn’t break out revenues or subscribers, but it’s part of “Other Bets,” a unit of Alphabet that includes other early-stage and “moonshot”  projects that span a wide range of industries.

In Q3, Other Bets posted an operating loss of $865 million, narrowed from a year-ago loss of $980 million on revenue s of $197 million, up from $141 million.

Other Bets revenue was primarily generated by Nest, Google Fiber, and Verily. Porat said Fiber investment remains the primary capex driver at Other Bets.

Google Fiber has hit the pause button in a batch of “potential” rollout cities as the division looks to “refine” its deployment and technology approaches.

“In terms of our existing footprint, in the cities where we’ve launched or are under construction, our work will continue,” Craig Barratt, SVP of Google parent company Alphabet and CEO of the company’s Access unit, announced Tuesday in this blog post titled Advancing our amazing bet.  “For most of our “potential Fiber cities” — those where we’ve been in exploratory discussions — we’re going to pause our operations and offices while we refine our approaches.”

Barratt’s role is also changing, also announcing in the post that “I’ve decided this is the right juncture to step aside from my CEO role. Larry [Page] has asked me to continue as an advisor, so I’ll still be around.”

The pause comes as Google looks to alter the focus on its business and product strategy, as well as its technology and deployment methods, with a great emphasis on less expensive wireless broadband options.

The shift follows Google Fiber’s recent acquisition of Webpass, a point-to-point wireless broadband service provider that serves portions of San Francisco, Oakland, San Diego, Miami, Chicago and Boston. Google has also asked the FCC for permission to move ahead with plans to trial wireless broadband in as many as 24 U.S. locations, including New York City, Chicago and Atlanta.

RELATED: Google Touts Potential for Wireless Broadband

“In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base,” Barratt added but didn’t reveal a figure.

Ars Technica reported that the Alphabet Access division that operates Google Fiber is laying off about 9% of its staff. Google Fiber has been asked for comment.

In August, The Information reported that Alphabet was making plans to cut Google Fiber’s staff in half – from 1,000 to about 500 – but a follow-up report by Light Reading said reports of a cutback of that magnitude were false.

REPORT: Alphabet to Cut Google Fiber Staff In Half: Report

Update: Google did not confirm the details of the layoff but did provide this comment from Page:  “I'm excited about the potential of providing super fast internet to more people. Craig has worked hard to scale this business, and I look forward to continue working with him in his new role as an Advisor.”

On the wireline side, Google Fiber has deployments of 1-Gig broadband and pay TV services underway in Kansas City (Missouri and Kansas); Atlanta, Ga.; Austin, Texas; Charlotte, N.C.; Nashville, Tenn.; Provo and Salt Lake City, Utah; and, most recently, in The Triangle region of  North Carolina.

RELATED: Nashville Approves ‘One Touch Make Ready’ Plan

Google Fiber  has been exploring expansions in Los Angeles; Chicago; Dallas; Portland, Ore.; San Jose, Irvine and San Diego, Calif.; Phoenix; Oklahoma City; Louisville, Ky.; and Jacksonville and Tampa, Fla. Google Fiber also has plans to offer service on a network being built by Huntsville Utilities.

MoffetNathanson analyst Craig Moffett, citing data from the U.S. Copyright Office, said in a recent report that Google Fiber ended Q2 2016 with 68,715 video subscribers, up 66.6% year-over-year, along with an estimate that Google Fiber had about 453,000 broadband customers by the end of June 2016.

Google Fiber doesn’t break out its individual revenues, but it is part of “Other Bets,” the unit of Alphabet that includes Google Fiber and other longer-term “moonshot”  projects. Other bets ,generated Q2 revenues of $185 million, up from $74 million a year ago, while operating losses widened to $709 million, from $555 million.

Google is gearing up to conduct wireless broadband trials in as many as 24 U.S. locations, including New York City, Chicago and Atlanta, according to a partially-redacted document filed with the FCC on August 5 that is seeking permission to move forward.

Google “requests authorization to conduct radio experiments in support of developing Citizens Broadband Radio Service (CBRS) technologies, using [REDACTED] experimental transmitters at up to 24 U.S. locations,” the company noted in the filing, adding that it’s seeking the green light to conduct experiments for 24 months.

The company said the FCC’s decision to allocate the 3.5GHz band for shared use opens up the door for wireless broadband options.

Google’s request is to operate its trials in and adjacent to the 3550-3700 MHz band that has been opened up for small-cell spectrum sharing by CBRS devices.

“Authority to operate in this range will ensure that Google has access to sufficient spectrum for experimentation while avoiding interference to incumbent operations…”

Google’s continued flirtation with wireless comes amid Google Fiber’s relatively slow deployment of FTTP networks in several markets. According to the San Jose Mercury News, Google Fiber has put buildouts on hold so it can pursue less expensive alternatives.

Ruth Porat, CFO of Google parent company Alphabet, said on the latest earnings call that Google Fiber is “exploring both fiber and wireless” while referencing Google’s recent acquisition of Webpass, a company that specializes in wireless broadband delivery in markets such as San Francisco, Oakland, San Diego, Miami, Chicago and Boston.

"We are working to test the viability of a wireless network that relies on newly available spectrum," an Alphabet spokesperson told Business Insider, the first to report about the FCC filing. "The project is in early stages today, but we hope this technology can one day help deliver more abundant Internet access to consumers."

According to the filing, Google is eyeing the following markets as potential test locations: Phoenix, Ariz.; Atwater, Los Angeles, Mountain View, Palo Alto , San Bruno and San Francisco, Calif; Boulder, Colo.; Tampa, Fla.; Atlanta, Ga.; Chicago, Ill.; Des Moines, Iowa; Kansas City , Kan.; Omaha, Neb.; Las Vegas, Nev.; New York City; Oklahoma City, Okla.; Portland, Ore.; Austin, Texas; Provo, Utah; and Blacksburg and Reston, Va.

On the wired end of the business, Google Fiber has launched service in parts of Nashville, Tenn.; Atlanta; Kansas City; and Provo, Utah, and has also committed to deploy in Salt Lake City; San Antonio; and Charlotte and Raleigh-Durham, N.C.  It has also been mulling expansions in Los Angeles; Chicago; Dallas; Portland, Ore.; San Jose, Irvine and San Diego, Calif.; Phoenix; Oklahoma City; Louisville, Ky.; and Jacksonville and Tampa, Fla.

In Atlanta, Google Fiber started off by using existing fiber infrastructure to deliver service to a select batch of apartment buildings. Google Fiber announced via Twitter this week that it has started sign-ups Atlanta for the network it is building there, and set up a deadline of September 29 for the Midtown East and Piedmont Heights areas.

“Other Bets,” the unit of Google parent company Alphabet that includes Google Fiber, saw revenues climb amid bigger losses.

Other Bets  pulled in revenues of $185 million, up from $74 million a year ago, while operating losses widened to $709 million, from $555 million.

Other Bets generally includes so-called “moonshot,” longer-term projects that also include Nest and Verily. 

Update: Speaking on the earnings call, Alphabet CFO Ruth Porat said the majority of Other Bets revenues were generated by Nest, Google Fiber and Verily. 

Alphabet’s Q2 consolidated revenues climbed 21% to $21.5 billion, and GAAP net income of $$4.87 billion, up from 3.93 billion.

Google ad revenues rose 19%, to $19.14 billion.

"Our terrific second quarter results, with 21% revenue growth year on year, and 25% on a constant currency basis reflect the successful investments we've made over many years in rapidly expanding areas such as mobile and video. We continue to invest responsibly in support of our many compelling opportunities,” Porat said in a statement.

Shares in Alphabet were up $28.15 (3.77%) to $774.06 each in after-hours trading. 

More to come after the earnings call. 

Marwan Fawaz, a long-time cable and tech industry exec, has been named CEO of Nest, the Google-owned maker of an iconic smart thermostat and other smart home products.

Nest’s original CEO and founder Tony Fadell shared that news by announcing Friday on the Nest blog that he was leaving the company more than two years after it was sold to Google for $3.2 billion.

Calling the news “bittersweet,” Fadell said “I have decided that the time is right to ‘leave the Nest,’” noting that revenues at the smart home company have grown in excess of 50% year-over-year, and that “millions” of people now use Next products in 190 countries. He also said the third-gen Nest Learning Thermostat sold 1 million units in half the time of its previous generation.

Nest is part of the “Other Bets” unit at Alphabet (Google’s new parent company) that also includes Google Fiber, self-driving cars, Verily (formerly Google Life Sciences), GV (formerly Google Ventures) and Google Capital X.  That division generated revenues of $166 million in Q1 2016, up from $80 million in the year-ago period.

Nest pulled down $340 million in sales last year, aided by sales from its acquisition of Dropcam, but still a figure that fell short of Google’s initial expectations, according to Recode.

“Although this news may feel sudden to some, this transition has been in progress since late last year and while I won’t be present day to day at Nest, I’ll remain involved in my new capacity as an advisor to Alphabet [Google’s parent company] and Larry Page,” Fadell wrote. “This will give me the time and flexibility to pursue new opportunities to create and disrupt other industries – and to support others who want to do the same – just as we’ve done at Nest. We should all be disrupters!”

Fawaz, Nest’s new CEO, has strong ties to Google as well as to the cable industry and technology vendor community.

Fawaz, a founder and principal of consulting firm Sarepta Advisors and recently-named to the 50th anniversary class of Cable TV Pioneers,was in charge of Motorola Home before Google sold it to Arris in 2013. Notably, Motorola Mobility expanded its reach into the connected home market in 2010 when it snapped up a startup called 4Home.

Of recent note, Fawaz was appointed to the board of billing and customer care company CSG International, and has been serving on the board of Synacor and as an advisory board member of ADT, Liberty Global and Guavus, a big data firm.

Update: Per his Linked In profile, Fawaz is the technical advisory board chair at ADT, a top company in the home security and automation sector. 

Fawaz is also a former CTO of Charter Communications and Adelphia Communications (sold to Comcast and Time Warner in 2005), and served as an engineering exec at MediaOne (now part of Comcast). He also served as an investment analyst at Paul Allen's Vulcan Inc.

“Marwan’s extensive technology and engineering knowledge, his experience with global service providers, as well as his background in connected home platforms will be valuable in continuing our trajectory, especially in scaling the business, working with our partners, and supporting our enterprise channels,” Fadell wrote. “I have no doubt that the company will continue to flourish under his guidance and can’t wait to see the innovations currently in development brought to market.”

The ultimate goal of Google Fiber remains a mysterious one. Does it plan to create a long-term, sustainable and profitable business, or is the plan to help to establish a workable game plan for municipal providers while also prodding other ISPs to accelerate their move to speeds of 1 Gbps and beyond?  We explored the ambitions of Google Fiber in this recent cover story (subscription required).

Ruth Porat, the CFO of Alphabet, Google’s new parent company, offered some additional color on yesterday’s earnings call.

“Like all of our access efforts, we’re really focused,” she said. “And our vision here is to create abundant and ubiquitous networks. We think there's a lot of opportunity to improve the experience that users have, and that's where the Fiber team is focused.”

Carlos Kirjner, an analyst at Bernstein Research who has retained a somewhat contrarian bullish view about Google Fiber’s potential to become profitable and put the hurt on MSOs and other incumbent providers, weighed in with a research note today.

“Staying true to our out-of-consensus view, we see investment in Google Fiber as a net positive or, at worst neutral, as we think the associated downside is limited given Fiber's deployment and go-to-market strategy, as well as what we have learned in our proprietary research in Kansas City and Provo,” he wrote.

Alphabet’s “Other Bets,” the part of the company that includes Google Fiber, saw revenues double amid a wider loss in Q1.

Porat reiterated that most initiatives in Other Bets are “pre-revenue,” longer-term projects and will be subject to financial lumpiness. However, the bulk of revenues from that group were generated by Nest, Verily and Google Fiber, with the bulk of capex from Other Bets originating from Google Fiber. 

Alphabet, Google’s new parent company, said Q1 revenues rose but losses also grew at its “Other  Bets” division, the portion of the company dedicated to so-called moonshot projects like Google Fiber, self-driving cars, Verily (formerly Google Life Sciences), Nest, GV (formerly Google Ventures) and Google Capital X.

Other Bets generated revenues of $166 million in Q1, up from $80 million a year ago, alongside an operating loss of $801 million, widened from a year-ago loss of $633 million.

Alphabet posted Q1 revenues of $20.3 billion, up 17% from $17.3 billion in the year ago quarter, along with earnings per share of $7.50.

But that just missed Wall Street expectations of earnings of $7.97 per share on revenues of $20.37 billion, and Alphabet shares were down almost 6% in after-hours trading  Thursday as a result.

Among some individual Google segments, its Websites pulled in Q1 revenues of $14.3 billion, up 20%, while ad revenues climbed 16%, to $18 billion.

“Our Q1 results represent a tremendous start to the year with 17% revenue growth year on year and 23% growth on a constant currency basis. We’re thoughtfully pursuing big bets and building exciting new technologies, in Google and our Other Bets, that position us well for long term growth,” said Alphabet CFO Ruth Porat, in a statement. 

Search behemoth Google will reorganize under a new holding company dubbed Alphabet that will be run by co-founders Larry Page and Sergey Brin as CEO and president, respectively. Sundar Pichai, currently senior vice president of products for Google, will become CEO of the search giant.

Alphabet, according to a blog posting by Page will include a conglomeration of companies, with Google being the largest. Among Alphabet’s other companies will be Calico, an anti-aging  company; Nest, a maker of Internet-connected devices for the home; Google Fiber, its high-speed Internet service; Google Ventures and Google Capital, its investment arms; and Google X, an incubator for projects like its self-driving cars.

Google itself will continue to include Google Maps, search, advertising, YouTube and its Android mobile operating system.

Some analysts see the changes as an admission by the company that it had become a bit too unwieldy. Its new structure seems to mirror another conglomeration of seemingly disparate assets – Warren Buffett’s Berkshire Hathaway. Berkshire’s assets include everything from interests in insurance companies, newspapers, railroads, corporate jet leasing company NetJet and Fruit of the Loom undergarments.

Investors appeared to like the change – Google shares were up 6.3% ($39.77 each) to $673.50 in after-hours trading Monday.

In the blog post, Page said that he and Brin had set out to form Google as an unconventional company, and the restructuring is a logical extension of that.  Le he said Google continues to operate well, the new structure will make it “cleaner and more accountable.”

Page said he and Brin chose the name Alphabet “because it means a collection of letters that represent language, one of humanity's most important innovations,” but also “because it means alpha-bet (Alpha is investment return above benchmark), which we strive for!”

Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Google will become a wholly-owned subsidiary of Alphabet. And its two classes of shares will continue to trade on NASDAQ under the symbols “GOOGL” and “GOOG.”

“We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes,” Page said in the blog posting. “But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.”

Consumer Watchdog borrowed from Shakespeare to register its lack of enthusiasm for the Google's announcement.

“A rose by any other name is still a rose and Google by any other name is still the Internet giant,” said John M. Simpson, Consumer Watchdog’s Privacy Project director.

“Alphabet through what will now be called its subsidiary will continue to track us around the web and build digital dossiers about us," said Simpson in a statement.  "It makes little difference to Google’s users. Consumer Watchdog said the move was undoubtedly prompted by criticism from investors that Google focused too much attention on speculative research projects that CEO Larry Page calls “moonshots.”