The revenue of Twitch [0], Squarespace [1] and Patreon [2] combined pales in comparison to that of YouTube [3].
The revenue potential in the advertising space cannot be underestimated. Merch has high fixed costs and does not scale dynamically. Live-streaming is inaccessible for both streamers and viewers (in comparison to YouTube videos). Donation fees aren’t a secure revenue source. Either the donators or the creators could turn off donations at any time. But ads are guaranteed. There’s so much to the ad space that isn’t publicly known; Google’s operating on a whole‘nother level.
It’s also a lot more complicated to start ten $300 million projects than to optimize one $3 billion project. The people steering the ship (CEO, CFO, CTO, ...) only have so much time and brain power. They could delegate projects to others, but that requires hiring the right people and that’s really hard. If you have 4 layers of accounting management, and the probability of a bad hire is 25%, the chance of each layer being managed well is only 32%. Whereas if you have only one or a few big projects, you can have less layers, so the probability of success increases all round.
(You might say that Google should do all these projects so can diversify. But why should they take the risk? There are thousands of startups out there testing the waters. They can just acquire those when they show promise. If those startups fail, Google loses nothing.)
(The claims in this comment are educated guesses from reading a lot of articles. I definitely haven’t run a $300 million project!)
The revenue potential in the advertising space cannot be underestimated. Merch has high fixed costs and does not scale dynamically. Live-streaming is inaccessible for both streamers and viewers (in comparison to YouTube videos). Donation fees aren’t a secure revenue source. Either the donators or the creators could turn off donations at any time. But ads are guaranteed. There’s so much to the ad space that isn’t publicly known; Google’s operating on a whole‘nother level.
It’s also a lot more complicated to start ten $300 million projects than to optimize one $3 billion project. The people steering the ship (CEO, CFO, CTO, ...) only have so much time and brain power. They could delegate projects to others, but that requires hiring the right people and that’s really hard. If you have 4 layers of accounting management, and the probability of a bad hire is 25%, the chance of each layer being managed well is only 32%. Whereas if you have only one or a few big projects, you can have less layers, so the probability of success increases all round.
(You might say that Google should do all these projects so can diversify. But why should they take the risk? There are thousands of startups out there testing the waters. They can just acquire those when they show promise. If those startups fail, Google loses nothing.)
(The claims in this comment are educated guesses from reading a lot of articles. I definitely haven’t run a $300 million project!)
[0] https://www.forbes.com/sites/mattperez/2020/01/08/report-ama... [1] https://www.drift.com/blog/squarespace-billion-dollar-growth... [2] https://www.forbes.com/sites/elisabethbrier/2019/07/16/next-... [3] https://www.theverge.com/2020/2/3/21121207/youtube-google-al...