Google's YouTube: Not Such A Money Pit After All?

Michael Learmonth | May 29, 2008 5:56 PM

/images/skateboard-dog.jpg The old wisdom: YouTube (GOOG) dominates Web video but can't make any money from it. Forbes' wisdom: YouTube still doesn't make much money, but a bit more than people think.

The mag says YouTube will make $200 million in revenue in 2008 and $350 million in 2009. These are unsourced numbers, but also not denied by YouTube head of content partnerships Jordan Hoffner, who participated in the story.

If true, that about doubles everyone else's revenue estimates for YouTube, including the widely-quoted $90 million estimate from Bear Stearns analyst Bob Peck or Morgan Stanley analyst Mary Meeker's $75 million to $189 million estimate. How does YouTube get there?

Front-page YouTube ad: $175,000 per day plus a commitment to spend at least $50,000 more on YouTube or Google.
Branded YouTube channel: $200,000 apiece.

Even if Forbes is right and YouTube makes $200 million this year, let's step back a minute and consider what that means: YouTube accounts for 73% of all visits to video sites (Hitwise) and, depending on who you believe, serves either 48% (Nielsen) or 38% (comScore) of all video on the Web. Meanwhile, eMarketer estimates $1.35 billion will be spent on Web video ads in 2008. So even though YouTube serves up the most videos, most of the money is going elsewhere -- professional video sites like Hulu, TV network sites, etc.

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11 Comments

Rav (URL) said:

May. 29, 6:49 PM

hulu - haha. you surely must be joking. I think bulk of it will go to google. Don't forget that google has started serving video ads on its network. Hulu will be lucky to get some crumbs from youtube.

RipFilms (URL) said:

May. 29, 7:51 PM

This is just the begining. Google didn't get where they are for being stupid. Watch you will see. I am also a youtube partner :)
www.youtube.com/ripfilms

insider said:

May. 30, 5:49 AM

is SAI content all unsubstantiated rumors?

peter he said:

May. 30, 9:53 AM

michael,

i think you are right about video ad dollars spending, in regards to youtube vs. hulu. didn't mr. zucker say that hulu sold its inventory just a month ago?

youtube is a like wal-mart and it is here to stay and may likely find ways to monetize its content and will be a major contributor to google's business growth down the road. but it must take a long-term view in regards to its relationship with major video content owners, otherwise it may continue to be a cost burden for google.

John Billington (URL) said:

Jun. 05, 9:48 AM

Maybe eMarketer is totally off on their ad revenue estimates.

How does the $200M scale into their acquisition price of YouTube? The forecast growth in online vid advertising is, what 40% at best? So it will be 2013 or so when they break the $1B revenue mark?

Any idea what the margin is on serving video?

frankie (URL) said:

Oct. 22, 8:27 PM

640-802 Google's YouTube: Not Such A Money Pit After All? I'm so scared. I've got nothing to lose.

mirc (URL) said:

Oct. 30, 2:24 PM

hi thanx
very nice
mirc

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carauto (URL) said:

Nov. 05, 11:31 PM