NBCUniversal's Peacock streaming service will join YouTube Premium's US subscription bundle starting early next year, the companies announced Monday. The multi-year partnership represents Peacock's largest wholesale distribution agreement to date. The deal comes as Peacock reached profitability in the second quarter after billions in investment. The service grew paid subscribers by 4% to 48 million compared to the first quarter. YouTube Premium subscribers will gain access to Peacock's content, including NFL football, NBA basketball, soccer, and Major League Baseball, alongside ad-free videos and music. NBCUniversal's linear television channels will remain on YouTube TV. The partnership arrives as Comcast prepares to spin off NBCUniversal entertainment and news media businesses into a separate company.

Alphabet's YouTube generated a record $11.06 billion in advertising revenue during the second quarter, approaching Netflix's $12.6 billion total revenue for the same period. YouTube's ad revenue figure excludes subscription income from YouTube Premium tiers. YouTube's revenue grew 12.8% year-over-year, slightly trailing Netflix's 13.4% growth rate. Netflix expects slower growth of 11.7% in the third quarter as it faces concerns about weak engagement and maturing markets. Whilst both platforms are highly profitable, Netflix reported a 33.4% operating margin in the second quarter. YouTube's operating margin is estimated to be in the teens, lower than Netflix's due to revenue sharing with content creators. The platforms have adopted elements of each other's business models. YouTube has expanded beyond free content to offer premium subscriptions, including music, pay-TV, and NFL Sunday Ticket.

Hollywood studios are hiring YouTube directors with promising early results. "Backrooms", a horror film by 20-year-old YouTube creator Kane Parsons, is projected to earn $60 million this weekend, potentially beating Disney's new "Star Wars" film. It follows "Obsession" by 26-year-old Curry Barker, which has grossed $74 million. The trend represents studios like A24 and Blumhouse using YouTube as a talent pipeline, giving online filmmakers theatrical opportunities. This differs from Mark Fischbach's "Iron Lung", which the YouTuber self-financed for $3 million and grossed $50 million by leveraging his 38 million subscribers. Whilst using digital platforms as creative incubators isn't new, the question remains whether more creators can convert online followings into cinema audiences independently, rather than through traditional studio backing.