Analyst: YouTube Could Lose $470M This Year

37 Comments

A new report by Credit Suisse projects that video-sharing giant YouTube (s GOOG) is on track to lose $470 million this year, writes Multichannel News.

Credit Suisse says YouTube will generate $240 million in revenue, but those revenues will be dwarfed by the $711 million in licensing, hardware, marketing and other expenses the site will incur. About half of that expense will go towards bandwidth, which Credit Suisse pegs at $360 million through the following math:

To arrive at the estimated $360 million bandwidth tab for YouTube, the analysts assumed the site will receive 375 million unique visitors in 2009 and that a maximum of 20% of those users are on the site at any given time. Credit Suisse’s analysis then assumed each user downloads a video at 400 kilobits per second, to yield a peak bit run-rate for YouTube of 30 million megabits per second.

Analysts at Credit Suisse came to the rather obvious conclusion that in order to generate more revenue, YouTube must increase the amount of monetizable, premium content (i.e. be more like Hulu). As if on cue, YouTube recently signed a clip distribution deal with Disney (s dis) and is reportedly in the midst of a drastic redesign of its site that emphasizes premium content over UGC; it’s due to be unveiled April 16.

Credit Suisse’s estimates come on the heels of a report earlier this week from Screen Digest that said YouTube would earn $120 million this year and one from Jefferies & Co. in March that said YouTube would earn $500 million. In its 2008 annual report, Google (s goog) said it had “yet to realize significant revenue benefits from our acquisitions of dMarc Broadcasting (Audio Ads) and YouTube.”

37 Comments

Robin

youtube dumb website….they show up ads in every corner of webpage..and also on videos also generating millions..check out the adsense…by google
revittut.blogspot.com

Mark W - CA

Load of rubbish, they can’t do math properly, nor are they qualified to analyze the marketplace. This is grossly disproportionate and it’s no wonder Wall Street is having such issues.

Neno Brown

This seems to explain the PRS and the Germany deal break down, there seems to be a great loss of cash-flow across the whole online video sector, what with Veoh, blip.tv, babelgum and the rest, re-callibrating their efforts.

Although youtube can weather the storm, I would not be surprised if there are some major right downs on the horizon, I mean how much can a VC take before realising, all that giltters is not gold.

I guess the VC’s are holding out to see if the G20 cash boost plays out in the ad market. Lets see if the trend is their friend.

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