Due to strong growth and better monetization, Citigroup analyst Mark Mahaney estimates that YouTube will make about $945 million this year, and will top $1.1 billion in gross revenue in 2011. YouTube continues to grow pretty substantially, Mahaney points out, despite its already large size. With more than 480 million unique users, the site is increasing visitors, page views, and overall video streams at rates of more than 30 percent year-over-year. YouTube continues to gain momentum in the online video space, growing just as fast as, or even outpacing, most of its peers.
One way this is seen is in growth among the most popular videos that people watch on YouTube. The top 20 videos together have brought in more than 98 million views over the past month, compared to 61 million views that the top 20 videos had just two years ago. Perhaps more importantly, more of those views are coming from professionally produced content. Mahaney reports that about 42 percent of views in the top 20 came from professionally produced music videos, with some TV ads thrown in as well.
Monetization is also improving, with YouTube now running ads against about 54 percent of its top 100 videos, compared to about 33 percent in June 2008. Ad frequency is also increasing, with YouTube placing multiple ad units into some videos. As recently as the second quarter of 2009, most videos that Citigroup studied had one ad, while in February 2010 that had grown to two ads. “We wouldn’t suggest that ad coverage is 50%+ across all videos on YouTube, but it is clear that Google is favoring more advertising around videos that have monetizable content, and for the first time, we are starting to see pre-roll and post-roll ads in videos,” Mahaney writes.
With continued strong growth and better monetization, Mahaney forecasts YouTube to bring in more than $1 billion in gross revenue and more than $700 million in net revenue by the end of 2011. That number was arrived at by comparing YouTube’s monetization with monetization at MySpace, while estimating 30 percent growth in 2010 and 20 percent growth over 2011.
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