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Is YouTube Getting too Cozy With its Enemy in New Partnership?

By James Brumley – Feb 24, 2020 at 3:25PM

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It may be more accurate to say the enemy sees its grim future, and is choosing to team up with a winner.

Telecom company Windstream Holdings (WINMQ) has forged a partnership with Alphabet's (GOOG -0.19%) (GOOGL -0.21%) YouTube. Going forward, Windstream will feature YouTube TV as a cable television alternative for Windstream's broadband customers.

But the agreement is unusual in that Windstream Holdings' high-speed internet company Kinetic already offers a streaming video service called Kinetic TV.

Photograph of woman's hand on TV remote, browsing streaming TV options.

Image Source: Getty Images.

The partnership may be a preview of the new norm, as traditional cable television crumbles under the weight of cheaper, internet-based alternatives like Netflix or so-called skinny bundles like YouTube TV.

High-speed internet access still requires the physical presence of a local service provider, but how consumers utilize those connections is not limited by geography. As such, cable companies have struggled to compete with cheaper streaming services, which are arguably better positioned to promote their products.

YouTube, for instance, is part of Google, which is not only the world's most-used search engine but also the name behind some of the web's most utilized features like email and file storage. YouTube is already the world's busiest online video platform as well. Hulu, by comparison, sells access to live network broadcasts that qualify it as a skinny cable bundle provider. It's majority-owned by Walt Disney and can draw on namesake content as well as from ABC. Smaller-scale cable providers without their own studios -- like Windstream -- simply can't afford to meaningfully compete on their own. 

Not only is it unlikely to be the last, it's certainly not the first such partnership for YouTube TV either. Verizon's Fios, Cincinnati Bell, and Hawaiian Telcom all also feature YouTube's streaming alternative to cable TV.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. James Brumley owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Netflix, and Walt Disney. The Motley Fool recommends Verizon Communications and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Alphabet (A shares) Stock Quote
Alphabet (A shares)
$101.43 (-0.21%) $0.21
Windstream Holdings, Inc. Stock Quote
Windstream Holdings, Inc.
Alphabet (C shares) Stock Quote
Alphabet (C shares)
$102.22 (-0.19%) $0.19
Netflix Stock Quote
$236.73 (-1.67%) $-4.01
Walt Disney Stock Quote
Walt Disney
$100.80 (-0.63%) $0.64
Verizon Communications Stock Quote
Verizon Communications
$39.40 (-1.03%) $0.41
Cincinnati Bell Stock Quote
Cincinnati Bell

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