Why YouTube Views May Be Slowing: The Law Of Large Numbers

While highlighting key YouTube data points through May 2016, Citi’s Mark May commented on the apparent slowdown in viewing metrics. The analyst maintained a Buy rating for Alphabet Inc (NASDAQ: GOOGL), with a price target of $900.

“Each month we track third-party data for the top 1000 video producers on YouTube which helps provide an understanding of intra-quarter trends,” analyst Mark May wrote. Alphabet does not disclose any YouTube related metrics.

May 2016 Data

May enumerated the following key data points for YouTube through May:

• YouTube worldwide video views totaled 58bn, representing a 59 percent y/y increase in May, versus 35 percent in April and 60 percent in March.
• Total cumulative views on YouTube totaled 1.54trn. On a trailing-three-month basis, total views totaled 175bn, representing a 50 percent y/y increase in May, versus 56 percent in April and 74 percent in March.
• Total number of subscriptions to the top 1000 publishers totaled 3.24bn at the end of May, adding 89mn channel subs in the month, representing a 36 percent y/y increase, versus 15 percent in April and 30 percent in March.
• Total number of videos available on YouTube totaled 4.41mn at the end of May, representing a 4.8 percent y/y increase in content.

“Although our tracker remained resilient in April and May (these months ranked #2 & #3 respectively for most views in YouTube history), we note that the law of large numbers is starting to cause deceleration in the viewing metrics that we track,” the analyst said.

Although the year-to-date y/y growth of 46 percent appears impressive, likely beating the volume for Google’s search business, it does represent a decline from the 74 percent figure recorded in 1Q16. May added, “We do model Websites segment revenue growth to decelerate in 2Q16, though this data point may mean that delivering upside to our estimate is more challenging.”