Google (NASDAQ:GOOG) launched its Google+ social network last year to compete with social networking giant Facebook (NASDAQ:FB). Though it saw quite a bit of traction initially, the usage has declined as many of its users are inactive and engagement levels remain much lower than that of Facebook. Google+ was launched with some very compelling features like Hangouts and Circles, most of which were incorporated by Facebook in some way or another.
However, as one of the best multi-user video calling service, Hangouts is still one of the biggest draws to Google+. Facebook rolled out Video Chat powered by Skype last year, but it supports only one-on-one calls. Google+ Hangouts also offers broadcast and content sharing features that Facebook doesn’t. 
Google continues to add additional features to Hangout. In the last couple of months, it enabled Hangout users to call any phone through Hangouts and launched Hangouts on Air, a feature which enables users to broadcast their hangouts publicly to anyone through their Google+ streams, YouTube channels or websites.
This week, it added yet another feature to Hangouts – YouTube parties. Users can now watch YouTube videos with their friends in a Google+ Hangout and even create and share playlists in real-time. With this, Google is leveraging the social aspects of Google+ to drive engagement on YouTube and the popularity of YouTube to drive the usage of Google+ Hangouts.
All videos watched in a Hangout can be publicly shared on Google+, and live YouTube streaming videos can be watched in Hangouts too, making it one of the best ways to watch a live event online with friends.
If Google is able to continuously roll out features like these that Facebook doesn’t offer, it may be able to gradually attract a significant user base and generate increasing amounts of advertising revenue from Google+. The social data gathered from Google+ could also help it improve its core search experience and generate more revenue from advertising by offering better targeting features.
Search and display advertising account for more than 75% of Google’s total $680 Trefis price estimate, which stands 15% above its market price.Notes: