Google (GOOGL) Trims Its Smart TV Budget to Focus on YouTube
Tech giant Google (GOOGL) is reducing its investment in its smart TV division by cutting the budget for Google TV and Android TV by 10% and trimming staff, according to The Information. It is worth noting that these teams help power smart TV platforms used by brands such as Sony, Hisense, and TCL, as well as support Google's own TV device. The annual budget for this division was under $500 million, and up to a quarter of its 300-person team may have been affected by layoffs. However, Google plans to grow the team again in countries like India. Despite the cuts, the company says it's still investing in Google TV and highlighted that there are over 270 million Android TV devices in use.
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This shift is part of a bigger change within Google, as it focuses more on YouTube, which has become the most-watched streaming service in the U.S. In fact, viewers now spend 67% more time on YouTube than on Netflix (NFLX), according to Nielsen. As a result, Google's leadership is putting more support into growing YouTube's ad and subscription revenue, which reached over $50 billion in the 12 months ending September 2024. In addition, YouTube and Google Cloud together even passed a $110 billion annual run rate during the same period, which beat the company's goal for 2024.
With Google pulling back, competitors like Roku (ROKU), Amazon's Fire TV (AMZN), and The Trade Desk (TTD) are looking to grow their share of the connected TV market. At the same time, YouTube is making leadership changes, which include hiring Disney (DIS) executive Justin Connolly while also considering successors to top roles like Chief Business Officer. As YouTube's subscription services continue to grow, Google may shift even more resources away from smart TVs and into streaming.
Is Google Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on GOOGL stock based on 29 Buys and nine Holds assigned in the past three months. Furthermore, the average GOOGL price target of $199.11 per share implies 20.6% upside potential from current levels.
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