Alphabet reported 325 million paid subscriptions across Google One and YouTube Premium in Q4 2025, up from 300 million three months earlier. The milestone puts the company level with Netflix in total subscribers, though the comparison isn't exact since Google's figure includes cloud storage alongside video.
YouTube's combined advertising and subscription revenue reached $60 billion for FY2025, up 17% year-over-year. The growth looks solid until you examine Q4 ad revenue, which came in at $11.38 billion, missing analyst expectations of $11.84 billion. Ad revenue grew just 9% in the quarter, partly due to tough comparisons against strong 2024 U.S. election spending.
The real story is the subscription pivot. CEO Sundar Pichai said subscriptions now represent a meaningful portion of Alphabet's monetization strategy, with YouTube's subscription business estimated at $20 billion annually across YouTube Music, YouTube Premium, YouTube TV, and NFL Sunday Ticket. The company plans to launch over 10 genre-specific YouTube TV packages to increase subscriber flexibility.
YouTube Shorts maintained 200 billion average daily views in Q4, flat year-over-year. Alphabet claims that in some markets, Shorts ads now earn more per hour than traditional in-stream ads, though the company didn't specify which markets or provide supporting data. Over 1 million channels are using YouTube's AI creation tools, and 20 million users tried Gemini-powered content discovery in December.
Context: This shift toward recurring revenue matters because it shows how ad-dependent platforms are building predictability into their business models. Alphabet's total revenue crossed $400 billion for the first time, but the company is doubling capital expenditure in 2026 to $175-$185 billion, primarily for AI infrastructure. Google Cloud accelerated significantly with 48% growth to $17.7 billion, backed by a $240 billion backlog.
The fine print: YouTube's subscription revenue, while growing, remains substantially smaller than its advertising business. The Q4 ad miss suggests the platform may be experiencing saturation in core advertising markets. For APAC enterprise leaders evaluating Google Cloud commitments, the massive capex increase signals improved AI service availability, but Alphabet's 78% reduction in Gemini serving costs during 2025 suggests the company is managing infrastructure economics more effectively than competitors.