YouTube Shorts revenue per watch hour matches traditional video in US

YouTube Shorts has reached a significant monetization milestone in the United States, achieving revenue parity with traditional video content on a per-watch-hour basis. The short-form video platform now generates comparable advertising revenue to standard YouTube videos in the domestic market, according to statements made during Alphabet's third quarter 2025 earnings call on October 29, 2025.

"In the U.S., Shorts now earn more revenue per watch hour than traditional in-stream on YouTube," stated Sundar Pichai, CEO of Alphabet and Google, during the earnings presentation. The announcement represents a substantial shift in YouTube's monetization landscape, demonstrating that brief vertical videos can match or exceed the revenue generation capabilities of conventional horizontal content.

The achievement extends beyond US borders. Pichai indicated that in certain international markets, Shorts revenue per watch hour "now even exceeds in-stream's rate," though specific countries were not identified during the earnings discussion. This global performance variation suggests that advertising market dynamics and viewer engagement patterns differ significantly across regions.

YouTube Shorts launched globally in July 2021 as the platform's response to TikTok and Instagram Reels. The format initially struggled with monetization challenges, as traditional mid-roll advertising formats proved incompatible with videos lasting 60 seconds or less. The platform extended maximum Shorts duration from 60 seconds to three minutes in October 2024, providing creators with expanded storytelling capabilities while maintaining the vertical format optimized for mobile viewing.

Advertising revenue performance for YouTube overall demonstrated strong growth during the quarter. YouTube advertising revenues increased 15% year-over-year to $10.3 billion in Q3 2025, driven primarily by direct response advertising followed by brand campaigns, according to Philipp Schindler, Senior Vice President and Chief Business Officer at Google. The Shorts format contributed meaningfully to this growth trajectory, though specific revenue allocation between Shorts and traditional formats was not disclosed.

The monetization improvement comes after years of development work on the revenue-sharing model for short-form content. YouTube introduced Shorts monetization in February 2023, enabling creators to earn 45% of net revenue after music licensing costs. The revenue pool operates differently than traditional advertising, with a Creator Pool system that allocates revenue based on views per country and music usage across Shorts.

Philipp Schindler emphasized ongoing enhancements to Shorts' recommendation systems during the earnings call. "Our recommendation systems are driving robust watch time growth in our key monetization areas like Shorts and Living Room. As we leverage Gemini models, we are seeing further discovery improvement," Schindler stated. The integration of Google's artificial intelligence capabilities appears to be driving both viewership and monetization efficiency.

Living room viewing represents another critical growth area for YouTube. According to Nielsen data referenced during the earnings call, YouTube maintained its position as the number one streaming platform by watch time in the United States for more than two years. The platform's first live NFL broadcast in October 2025, an exclusive global game from Brazil, attracted more than 19 million viewers and established a new record for concurrent viewership of a live stream on YouTube.

The retail vertical continues leading YouTube's advertising growth, with Demand Gen campaigns helping monetize shopping-related categories. "We also improved performance on Demand Gen, with over 100 launches helping to increase conversion value by more than 40% for advertisers using target-based bidding on YouTube," Schindler noted. This performance improvement spans both traditional video and Shorts inventory.

Interactive advertising formats on living room screens have reached significant scale. "Looking at the Living Room, our long-term bet, more advertisers are adopting interactive, direct response ads, leading to an annual revenue run rate exceeding $1 billion globally for this format," Schindler announced. While this metric applies broadly to YouTube, the success of interactive formats in television environments suggests potential applications for Shorts content consumed on connected TV devices.

Small and medium-sized advertisers have embraced Demand Gen campaigns, contributing to accelerated revenue growth. "On direct response, we're excited about the growth in revenue we're seeing, especially from small and medium advertisers adopting Demand Gen," Schindler explained. The platform's automated campaign types appear to be democratizing access to sophisticated advertising capabilities across advertiser segments.

YouTube crossed 300 million paid subscriptions during the quarter, led by growth in Google One and YouTube Premium offerings. Subscription products including YouTube Music & Premium and YouTube TV demonstrated strong momentum, according to Pichai. The subscription base provides an additional revenue stream beyond advertising, though the primary focus of the Shorts monetization achievement relates to advertising revenue specifically.

Artificial intelligence features are streamlining content creation workflows for Shorts creators. At the Made on YouTube event, the platform introduced AI-powered tools including generative video capabilities and efficient editing features. YouTube launched Edit with AI, transforming raw camera roll footage into edited Shorts, while AI-powered Extend features enable creators to add generated segments to existing videos.

The platform also deployed AI to expand monetization opportunities. "We're also using AI to expand monetization, automatically identifying products to make their videos more shoppable," Schindler stated. This automated product identification capability applies across YouTube content types, potentially increasing revenue per view by converting passive viewing into shopping opportunities.

Revenue share structure for Shorts differs from traditional YouTube content. Long-form videos operate on a 55% creator revenue share model, while Shorts maintain a 45% share after accounting for music licensing costs. YouTube's ten diverse revenue streams provide creators with multiple monetization pathways, but advertising revenue sharing remains the dominant income source for most channels.

Google Services revenues, which include YouTube advertising, reached $87.1 billion in Q3 2025, representing 14% year-over-year growth. The segment's performance reflected strength across Google Search, YouTube advertising, and subscriptions. Operating income for Google Services increased 9% to $33.5 billion, though operating margin declined to 38.5% due to a $3.5 billion European Commission fine fully reflected in the segment.

The Shorts monetization achievement contrasts with challenges facing external publishers in Google's advertising ecosystem. Google Network advertising revenue declined 1% during Q2 2025 as AI features reduced traffic to publisher websites, demonstrating Google's strategic preference for owned inventory where the company maintains complete control over user experience and revenue capture.

Alphabet's overall quarterly performance exceeded expectations. Consolidated revenue reached $102.3 billion in Q3 2025, marking the company's first quarter surpassing $100 billion and representing 16% year-over-year growth. The milestone quarter demonstrated continued momentum across search advertising, cloud computing, and subscription services despite regulatory challenges.

The monetization parity between Shorts and traditional video represents a significant validation of short-form video as an advertising medium. When YouTube launched revenue sharing for Shorts in early 2023, concerns persisted about whether brief vertical videos could generate comparable advertising value to traditional horizontal content with established mid-roll advertising placements. The Q3 2025 results demonstrate that these concerns proved unfounded, at least in markets where Shorts monetization has reached maturity.

Shorts' lower revenue share compared to traditional content provides YouTube with improved gross margins on short-form inventory. During previous earnings discussions, Alphabet executives noted that this differential helps offset the significant infrastructure investments required to support billions of short-form video uploads and serve massive viewing volumes. The combination of comparable revenue rates and favorable margin structure positions Shorts as an increasingly valuable component of YouTube's advertising business.

Looking ahead, advertising revenue faces challenging year-over-year comparisons. According to Anat Ashkenazi, Senior Vice President and Chief Financial Officer at Alphabet and Google, Q4 2025 advertising comparisons will be impacted by strong spending on US elections during Q4 2024, particularly affecting YouTube. The company expects this comparison challenge to weigh on year-over-year growth rates despite underlying business momentum.

The achievement signals maturation of short-form video as an advertising platform. What began as an experimental format struggling with monetization questions has evolved into a revenue-generating business comparable to YouTube's established video offerings. For advertisers, this monetization parity suggests that Shorts inventory should receive consideration equivalent to traditional video placements in media planning processes, particularly for campaigns targeting mobile-first audiences.

For creators, the revenue parity milestone validates investment in short-form content production. Creator education effortshave expanded as YouTube provides guidance on successful Shorts creation, while AI-powered tools lower technical barriers to production. The platform's ten monetization methods enable diversified business models less vulnerable to algorithm changes affecting any single revenue source.

The Shorts monetization achievement arrives as YouTube continues expanding AI integration across its creator tools. Photo-to-video capabilities powered by Veo enable creation of dynamic Shorts from static photographs, while generative effects transform selfies into unique video content. These tools democratize content creation by reducing production complexity, potentially expanding the creator base and increasing overall Shorts inventory available for monetization.

Timeline

• July 2021: YouTube Shorts launches globally to all users, competing with TikTok and Instagram Reels
• February 2023: YouTube begins paying creators for Shorts views with 45% revenue share after music licensing
• October 15, 2024: YouTube extends maximum Shorts duration from 60 seconds to three minutes
• March 31, 2025: YouTube changes Shorts view counting method, removing minimum watch time requirement
• July 23, 2025: YouTube introduces AI video creation tools powered by Veo for Shorts creators
• September 26, 2025: YouTube Shorts Remix gains AI-powered Extend feature for adding generated segments
• October 29, 2025: Alphabet announces YouTube Shorts revenue per watch hour matches traditional video in US during Q3 2025 earnings call
• November 2025: YouTube launches Edit with AI for automated Shorts creation from camera roll footage

Summary

Who: YouTube, Alphabet's video platform with billions of monthly users, announced monetization milestone for Shorts format affecting creators and advertisers globally.

What: YouTube Shorts achieved revenue parity with traditional long-form video on a per-watch-hour basis in the United States, with some international markets exceeding traditional video rates. The platform reached this milestone while YouTube advertising revenues grew 15% year-over-year to $10.3 billion in Q3 2025.

When: The achievement occurred during the third quarter of 2025, with results announced on October 29, 2025, during Alphabet's earnings call. The milestone comes more than four years after Shorts launched globally in July 2021 and nearly three years after monetization began in February 2023.

Where: Revenue parity was confirmed for the United States market specifically, with unnamed international markets achieving even higher Shorts monetization rates. The achievement spans YouTube's entire ecosystem including mobile applications, desktop viewing, and living room screens through connected TV devices.

Why: The monetization parity matters because it validates short-form vertical video as a comparable advertising medium to traditional horizontal content, removes creator concerns about revenue potential of Shorts versus long-form content, demonstrates effectiveness of YouTube's revenue-sharing model for brief content, and confirms that advertisers value Shorts inventory equivalently to standard video placements. For the marketing community, this signals that Shorts should receive media planning consideration equivalent to traditional YouTube video inventory, particularly for mobile-first campaign strategies targeting younger demographics. The achievement also demonstrates that platforms can successfully monetize short-form content at rates comparable to established formats, potentially influencing competitive strategies across social video platforms.