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Why would they pay to promote when they own YouTube anyway?

by speps 6y ago

otalp 6y ago
Two different teams. The money largely stays within Google but each team's accounting is taken care of.
a_humean 6y ago
When you are as large a company as google is its easier for accounting purposes to treat internals as just another customer albeit maybe with a discount. Its very common within large corporates to pay other entities within the corporation for services and goods, and even to loan each other money at some interest rate and a repayment agreement. Its also often how internal cost centers within a company justify their existence, by charging the teams that use their services. I've worked in places where it is not possible to get anyone not on your team to do anything unless you can provide an internal cost code to charge to.
- raxxorrax 6y ago
  True, but I still doubt that ad costs are any factor for a project like this or any Google project. As for Stadia, I play games from time to time but it wouldn't have those I like most and I also like to own media, so it isn't really too interesting. I still think it will be a niche product. Enthusiasts probably won't switch and for the casual market you probably go with a reduced palette of games. Although that might depend on contracts Google can make with developers.
toyg 6y ago
Most large companies are divided internally into multiple entities / different companies. They charge each other for services they provide; the accountants will reconcile all that (“intercompany matching”) then sum up finances of all companies in the group, including stuff they own only partially (“financial consolidation”), to obtain an actual view of the financial status of the entire group. There is an entire category of software dedicated to this activity, which happens to be my area of expertise.
scott_w 6y ago
There’s benefits and drawbacks to this. Imagine being the ads team and being told “you must run these ads for free. Oh, by the way, your revenue targets are the same.” You’d be upset to say the least! Reduce revenue targets? By how much? That sounds like a complicated way to get the same result. Also, paying for intra company services simplifies RoI calculations. Instead of having to work out “how much ad revenue could I have made?” and trying to guess the opportunity cost, you have clear numbers. Stadia spent X on marketing and made Y revenue. Your ad team process is unchanged and Stadia have the freedom to market the product however they please. Where things get dicey can be when you’re forced to use your own company. A real life example is a company that sells parts and also has a repair division. The repair division MUST buy from distribution at market rates and MUST add a markup on. The result is the customer gets double markup charged on a part AND pays for labour on top. You can guess how competitive this company is on bids where alternative suppliers can offer parts cheaper.

Why would they pay to promote when they own YouTube anyway?

by speps 6y ago

Why would they pay to promote when they own YouTube anyway?

otalp 6y ago

Two different teams. The money largely stays within Google but each team's accounting is taken care of.

a_humean 6y ago

When you are as large a company as google is its easier for accounting purposes to treat internals as just another customer albeit maybe with a discount. Its very common within large corporates to pay other entities within the corporation for services and goods, and even to loan each other money at some interest rate and a repayment agreement. Its also often how internal cost centers within a company justify their existence, by charging the teams that use their services. I've worked in places where it is not possible to get anyone not on your team to do anything unless you can provide an internal cost code to charge to.

raxxorrax 6y ago
True, but I still doubt that ad costs are any factor for a project like this or any Google project. As for Stadia, I play games from time to time but it wouldn't have those I like most and I also like to own media, so it isn't really too interesting. I still think it will be a niche product. Enthusiasts probably won't switch and for the casual market you probably go with a reduced palette of games. Although that might depend on contracts Google can make with developers.

toyg 6y ago

Most large companies are divided internally into multiple entities / different companies. They charge each other for services they provide; the accountants will reconcile all that (“intercompany matching”) then sum up finances of all companies in the group, including stuff they own only partially (“financial consolidation”), to obtain an actual view of the financial status of the entire group. There is an entire category of software dedicated to this activity, which happens to be my area of expertise.

scott_w 6y ago

There’s benefits and drawbacks to this. Imagine being the ads team and being told “you must run these ads for free. Oh, by the way, your revenue targets are the same.” You’d be upset to say the least! Reduce revenue targets? By how much? That sounds like a complicated way to get the same result. Also, paying for intra company services simplifies RoI calculations. Instead of having to work out “how much ad revenue could I have made?” and trying to guess the opportunity cost, you have clear numbers. Stadia spent X on marketing and made Y revenue. Your ad team process is unchanged and Stadia have the freedom to market the product however they please. Where things get dicey can be when you’re forced to use your own company. A real life example is a company that sells parts and also has a repair division. The repair division MUST buy from distribution at market rates and MUST add a markup on. The result is the customer gets double markup charged on a part AND pays for labour on top. You can guess how competitive this company is on bids where alternative suppliers can offer parts cheaper.