Five Years of Pricey Super Bowl and NBA Finals Commercials Wins the vMVPD Market for Google and YouTube TV ... But Now What?

YouTube TV
(Image credit: Alphabet)

After launching its virtual pay TV service, YouTube TV, in May 2017, Google signed a multiyear deal with Disney to become the premiere sponsor of the media company's live NBA broadcasts, an agreement that included packaging ABC's coverage of the pro hoops league's signature event as the "NBA Finals Presented by YouTube TV." 

Specific monetary figures were never announced, but it couldn't have been cheap for Google. According to Adweek, TV commercial time during Game 1 of the 2018 NBA Finals -- the first year of YouTube TV's sponsorship deal -- ran between $690,000 - $830,000, depending on placement.

Also: YouTube TV Claims It Has 5 Million Subscribers

We couldn't find a credible updated figure for the recently completed 2022 NBA Finals. But as Next TV noted back in May, YouTube TV definitely, er, played a lot of minutes during this year's playoffs, festooning them with bogusly supported ads that compared the vMVPD's monthly price to cable ... which really hasn't promoted its TV products on television since the Michael Jordan era. 

"Given our concerns about the economics of underlying virtual MVPD models, it is hard to argue that this was a great use of capital on the unique merits of the YT TV offering," MoffettNathanson principal analyst Michael Nathanson said to Next TV in a Wednesday email exchange. 

"If Google only wanted to be in the vMVPD biz, I doubt it would have made sense economically," noted LightShed Partners' Rich Greenfield, noting what might be a larger agenda for the parent company. 

YouTube TV's live-sports promotional largesse hasn't been confined to the NBA, evidenced by its big Super Bowl commercial in February. 

Certainly, in the subcategory of virtual MVPDs, Google's marketing spend is at least somewhat rivaled by Hulu, which also focuses its content agenda and advertising on expensive live sports. (Witness all those Hulu + Live TV ads during the playoffs featuring Memphis Grizzlies sensation Ja Morant.)

But as YouTube TV's rare subscriber disclosure on Tuesday revealed, the platform is now the vMVPD category leader, counting 5 million customers. Barring a highly unlikely explosive second quarter from Hulu + Live TV -- which is now $15 a month more expensive than YouTube TV, given the latter's ongoing first-three-month promotion -- YouTube TV has opened up a commanding lead in the race for vMVPD subscriber scale.

“When we launched YouTube TV five years ago, we wanted to make watching TV even more enjoyable — featuring a modern product experience without all the commitments, equipment fees and hassle,” said Christian Oestlien, VP of product management for YouTube TV and connected TV at Google, in a blog post Tuesday. “Today, we’re humbled that five million of you are currently on this journey with us.”

Hulu + Live TV ended Q1 with 4.1 million subscribers following a $5-a-month price increase in December and the bleeding of 200,000 customers. It's questionable if the JV's controlling stakeholder, Disney, will invest to rally the platform in the vMVPD market at a time when it's still haggling out its co-ownership situation with Comcast/NBCUniversal.

Meanwhile, bereft of two major broadcast networks (ABC and CBS), and serving a parent company (Dish Network) far more concerned with the buildout of a 5G wireless network, Sling TV hasn't grown meaningfully in years, losing another 234,000 customers in Q1.

So that leaves YouTube TV as the vMVPD leader, ranking as the No. 5 operator of bundled pay TV service overall, trailing only the linear likes of Comcast (just under 17.7 million traditional TV subscribers at the end of Q1), Charter Communications (15.72 million), DirecTV (14.3 million estimated remaining customers across satellite TV, legacy AT&T U-verse and DirecTV-branded virtual pay TV services) and Dish (just under 8 million satellite TV subs).

So what does this mean for Google? Is the investment worthwhile?

"As a way to build strong, new relationships with valuable consumers of premium content and the longer-term ability to monetize those relationships through advanced advertising and CTV hardware sales, I would say that the jury is still out," Nathanson said.

Noted TVREV analyst Alan Wolk: "If it was anyone other than Google, I’d say it was worth it to establish a sizable presence in the industry.

"But it’s unclear what Google’s end game is here," Wolk added. "Is it just to get more TV data for better ad targeting? Is it more to just say they could? Are they tracking web behavior and TV viewing behavior? Learning for a bigger launch overseas? Do they see it as a marketing tool for the main YouTube site?"

Beyond heavy marketing/promotion, Google has worked hard to establish YouTube TV as a bundled replacement for linear services, forging deals with tier 2 telecoms exiting the TV/video business to market the vMVPD to their customers. 

Certainly, bundling a sports-centric lineup of more than 85 channels, including all four major broadcast networks and their affiliates, remains a tough, low-margin business for YouTube TV.

But unlike some of Google's other video business dalliances over the years, Google seems determined to stay in this one, using the power of that $1.48 trillion Alphabet market capitalization to sustain itself.

"It’s interesting in that Google usually suffers from Shiny Object Syndrome, where they will roll something out, spend money on it and then quickly forget about it (YouTube Red, Google Plus) but they seem to actually be committed to YouTube TV," Wolk said. ■

Daniel Frankel

Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!