CASE Forum

YouTube: How to Replay Success?

Susan Wojcicki has built a career taking risks -- from joining Google after it had been a startup in her garage, to persuading the tech giant to acquire YouTube. Now, as she considers which way YouTube should go next, will she be able to repeat her success in a fast-moving, volatile environment?

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Google Video may ring few bells nowadays, especially among younger millennials, but it wasn't so long ago that it was one of the most important projects on the tech giant's front burner. But just when it was ready to launch in 2004, a new startup came along and stole its thunder -- much like Google had done to rival search engines a few years earlier. The startup's name was YouTube, and it seemingly came out of nowhere to take pole position in the emerging internet video market.

The executive in charge of Google Video, Susan Wojcicki, was left with an unenviable choice: either stick to her guns, believing that Google Video would eventually catch up; or recognize that YouTube had beaten Google to the punch, and focus on acquiring YouTube instead. With other bidders moving in, the decision had to be made fast.

"I had to go to our funders and our board and tell them the product that we had spent so much time building -- Google Video -- was losing, and we would have to spend over $1.5 billion to fix the mistake," recalls Wojcicki. "It was painful, it was public -- it was one of the hardest decisions that I've had to make."

And yet that decision -- Google spent $1.65 billion to acquire YouTube in 2006 -- paid off handsomely. By 2015, YouTube's market value had soared to $70 billion and it boasted more than a billion unique visitors each day. The video-sharing site consolidated its position as a universal platform for people to "entertain, dance, sing, laugh, love and learn," as Wojcicki puts it, helping to launch the careers of celebrities and contributing to political change in countries as far and wide as Egypt, Ukraine and Venezuela.

Despite its market dominance and growing revenues, a decade after its acquisition by Google, YouTube was still struggling to break even. This is one of the main reasons why Wojcicki was named CEO of the company that she had persuaded Google's board to acquire. Her job was to turn revenues into profits, just as she had done years earlier at Google, by helping to create AdWords, Google Analytics and AdSense.

Facing New Competition
This time, however, Wojcicki faced a more daunting competitive environment. Two market heavyweights -- the music industry and Hollywood -- both regarded YouTube as a rival.

Music labels vilified the company, complaining that its online streaming ate into their music video margins and that user uploads infringed upon copyright laws. Some music labels had begun devising new strategies to challenge YouTube's dominance of music content. Vevo, the music video streaming service owned by Universal and Sony, was developing a new business model aimed at the higher end of the market to differentiate itself as "a specialty store for music," rather than being "a very successful flea market," as Vevo CEO Erik Huggers has described YouTube.

In the movie industry, video service companies such as Netflix and Amazon were staking new ground in film production and distribution. And with Facebook and Vessel emerging as increasingly prominent viral video competitors, YouTube needed to innovate -- and fast.

Upon her arrival at YouTube, Wojcicki began expanding the site as well as luring TV advertisers. During her first year, innovations included introducing subscriptions, original content, 3-D and virtual reality. As Wojcicki told the Financial Times, virtual reality might start off by being a novelty, but it had attractive prospects of becoming "really compelling."

Her biggest challenge was to transform YouTube into a credible, competitive content provider that is at once global, social, cuts across divides, and is available on demand. To that end, in February 2017 Google launched YouTube TV -- a $35-a-month TV service that would package programming from the main U.S. broadcast networks (ABC, CBS, Fox and NBC) with several cable channels. It was a risky play, especially in a saturated market where more established competitors like Amazon, Netflix and Hulu enjoyed higher perceived value.

However, in a world where change is constant and accelerating, "there is no better strategy than to embrace change," insists Wojcicki. Based on her track record, almost every time Wojcicki has embraced or driven change, YouTube's parent company, Google, has benefited. But could her winning streak run out? Is she the right person to lead YouTube in the current environment?

Doubts remain as to whether taking the battle to YouTube's biggest rivals on their own turf, or betting the farm on virtual reality, is the right sort of change for the world's biggest internet video service provider. Is the value proposition competitive enough?

The case study "YouTube CEO Susan Wojcicki: Can She Deliver Again?"(SM-1649-E), by Isabel Villamor and Marta Elvira, holder of the Puig Chair of Global Leadership Development, is available as an online case from IESE Publishing at


Ramos Pineda, Vicente
January 15, 2018 16:49:22

El principal error en su nuevo enfoque, es el hecho de que Youtube nació como una plataforma de video de los usuarios para los usuarios y se popularizó a través de pagar a los creadores del contenido “youtubers”.
Pero ha iniciado la persecución de Netflix y otros que producen contenidos con producciones millonarias, haciendo que actualmente youtube quede en medio de la nada en una especie de limbo en el que nadie entiende cual es su fortaleza ni su propuesta de valor.
Insistir en querer abarcar ambos mercados puede detonar en la perdida de confianza del usuario que migre a otras plataformas que surjan del boquete que el Youtube original dejó.