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Summary:

Google’s YouTube may be dominating the online-video market, but that’s not translating into profits — at least not yet. Just how much it’s…

Google’s YouTube may be dominating the online-video market, but that’s not translating into profits — at least not yet. Just how much it’s losing a subject of great debate. In a report today, CreditSuisse analyst Spencer Wang estimates that the site will lose $470 million this year. Wang says YouTube’s revenue will jump 20 percent to $240 million, but that the increase will be offset by a staggering $710 million in costs. More than half of that comes from bandwidth costs, which Wang puts at $360 million.

Wang does say that there are a number of ways that YouTube can improve its financial results, including improving the effectiveness of its ads and striking more deals with entertainment companies. The latter is already happening, judging from the deal YouTube struck with Disney (NYSE: DIS) earlier this week to share ad revenue from clips Disney puts on the site.

  1. Be an alternative to the commercials now being skipped with DVRs. Also, if your site puts up super bowl numbers in traffic, charge super bowl rates. Offer streaming new releases to movie that cost a little less then buying it at the store. There should be many ways to make money.

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  2. youtube is a wholly owned subsid of google. whether it's a profitable division of its parent is academic. the parent is very profitable. the benefits that YT brings to it are strategic. moreover, google has its own data centers, so YT doesn't ostensibly 'pay' for bandwidth.

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  3. Whether YT is making losses or profits is of high interest to Google's shareholders, if not to the management. And of course YT / Google pays bandwith to the ISPs, since the guys who are streaming videos to and from YT are of course *not* sitting in Google's data centers, but at home, in their basements, in their garages, in their cubicles… You get the picture.

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  4. $500 million is a very huge loses for Youtube but the father google is still going strong. i think it because of recession why youtube is struggling about that.

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  5. youtube have been lazy.

    it is phenomenal that it is losing money when you loook at its market share etc.

    let me run the f*cking thing

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  6. They are losing because most of their ads now are not paying well and they have a lot of power consumption…

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  7. Whoa – $1m in bandwidth costs, per day.

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  8. in 10 years time youtube will be making a lot more money than google search. it's growth is incredible and google will hone it's revenue model. it will end up being a massive success as people will spend more time watching video on the web than anything else. these figures, whether they are real or not, will not matter then

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  9. in 10 years time youtube will be long dead and forgotten.. its nothing but a mash of idiots, losers, creeps, and weirdos now that everyone has a built in camera to their phone. It will never take over google search.

    Just like Social Networking sites.. Face The Jury, Hot or Not, Myspace all have proven its a fad that dies out when the masses short little attention span dims out because all the idiots take over and everyone else jumps ship to the next 'big thing' . Facebook is on the upside, but is quickly being over run too.

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  10. You tube is great source of Search engine marketing and earning profit. But there is up and down in all fields so it happens.

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