Alphabet’s (NASDAQ: GOOG, GOOGL) online ad company Google owns YouTube. According to Trefis estimates, YouTube makes up over 12.5% of Alphabet’s value. Trefis also estimates that it generated nearly $12.6 billion in revenues in 2015. However, Alphabet continues to explore avenues to boost YouTube’s revenues. While last year the company launched the ads free videos streaming subscription services on YouTube platform called YouTube Red, it is now exploring a paid YouTube subscription cable service called Unplugged that would offer customers a bundle of cable TV channels streamed over the Internet.  Through the launch of these services, the company is trying to disrupt the $64 billion video-on-demand (VoD) industry  and the $200 billion TV advertising industry. In this note, we explore the VOD industry and the subscription VOD model. In a second article, we explore how YouTube can disrupt the cable industry and monetize its skinny cable model through AVoD (see below).

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