Sales of apps and content via the Google Play store are primarily responsible for a half-billion dollar revenue increase year-over-year at Google’s fastest-growing business segment, executives reported during the company’s second-quarter earnings call.
Concurrently with the earnings announcement, chief business officer Nikesh Arora revealed that he will step down from his position to become vice chairman of SoftBank Corp. and CEO of its internet and media division. Google sales executive Omid Kordestani will become the temporary leader of its sales operations, effective August 1.
The segment Google describes as “Other Revenue” represents almost exactly a tenth of its overall sales, pulling in $1.596 billion of its overall $15.955 billion during the April-to-June period. The segment revenues were up $550 million, or 53%, compared with the same quarter in 2013; while companywide gross overall consolidated revenues were up 22% over the same period.
“Digital sales of apps and content in our Play store drove the year-over-year growth [in the Other Revenue segment],” said senior vice president and chief financial officer Patrick Pichette during the July 17 afternoon call.
The Other Revenue segment is one of three slices of its business that Google describes, alongside Google Sites revenue, or its core search advertising business, and Network revenue, from products such as AdExchange and AdMob.
In a slide accompanying the presentation, Google identified three areas of “high consumer success” in which it will continue to invest: Android/Play, YouTube, and Chrome. Google doesn’t normally break out revenues from YouTube, and company executives declined to provide an estimate during the call. A story published earlier this month by The Information pegged its 2013 revenues at $3.5 billion; but Pichette deflected an analyst question that seemed to refer to that report, noting that Google doesn’t comment on outside estimates.
Neither Pichette nor Arora directly answered an analyst question about how high YouTube planned to go “up the professionally created content funnel,” suggesting competition with the original works commissioned by Netflix and Amazon. Arora said it already has “all forms of professionally created content,” but didn’t say whether it would fund original series or other programming.
Another analyst asked if Google planned to bundle Internet access, via its Google Fiber program, with content such as YouTube in a subscription model. Arora said broadly that appetite for bandwidth is increasing, consumption of “non-linear” content from different sources is on the rise, and the company will experiment with payment-based and advertising-based models.
Company executives stressed the growth of Play, noting multiple times that it now distributes video content including movies and TV shows in 90 countries, while the store has distributed more than $5 billion to developers.
In response to another analyst question, Arora said Google is likely to begin indexing app content in core search results, and compared that process to other types of content indexing and monetization in the past.