After TikTok was banned in India, several players attempted to take the number one spot in short video format, including legacy platforms like YouTube and Instagram. While both platforms have been wildly successful, they created issues for existing users. This was particularly true for Instagram. Short-form video content found a much safer home on YouTube.
Shorts went global in 2021, gaining massive popularity. However, what began as a strategy to compete with rivals like TikTok and Meta is now raising concerns within YouTube about its impact on its core business of long-form content.
Shorts cannibalizing long-form content
As per a Financial Times report, employees at YouTube are worried that YouTube Shorts might overshadow the company’s primary revenue source, its long-form videos. While Shorts led to increased viewership and content creation, it also diverted audiences away from traditional long-form content, where advertisers spend most of their money.
People working at YouTube are apprehensive that the short-video platform Shorts could “cannibalize” its core business. Recent strategy meetings at YouTube have discussed the risk of long-form videos becoming less popular.
This situation has put YouTube in a dilemma. Short-form videos are popular because they’re quick to consume, similar to TikTok and Instagram Reels. However, YouTube primarily earns revenue from advertisements, and short videos offer fewer ad opportunities, resulting in lower profits than long-form content.
Traditionally, long-form content is what has attracted advertisers. While several platforms have tried to pivot advertisers to shorts, most of them have failed at doing so. YouTube is actively searching for ways to increase ad revenue from Shorts but hasn’t been able to crack the code.
Content creators moving away from long-form content
Content creators are also producing fewer long videos and instead are choosing to make Shorts. Newer creators, fuelled by the desire to expand to a more sizeable audience and how YouTube’s algorithm pushes short content, focus on Shorts more than long-form videos.
This is causing concern among YouTube staff. The platform must balance keeping its audience engaged while finding ways to generate income.
In October of 2022, YouTube reported its first-ever quarterly drop in ad revenue since 2020, when it began writing its performance separately. In subsequent quarters, the platform continued to report declines compared to the same periods in the previous year.
A Catch-22 situation
Despite these challenges and concerns, YouTube can’t ignore the popularity of Shorts. The platform is well aware of this and is aggressively promoting Shorts to its vast user base, even if it means sacrificing some ad revenue. It’s seen as a defensive move to compete in the evolving short-form video landscape.
YouTube has acknowledged these concerns but maintains that Shorts is designed to complement, not compete with, other content formats on the platform, such as audio and live streams. The company sees Shorts as creating a virtuous cycle that attracts new viewers to different content formats.
To address these concerns about Shorts potentially impacting its core business, YouTube should focus on revenue-driving features like AI summaries and exclusive content partnerships, such as NFL highlights.
