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Google purchased YouTube for more than $1 billion, but can't make a profit on the popular video sharing site

After purchasing YouTube for a hefty $1.65 billion three years ago, Google is still trying to find ways to turn the world's No. 1 video sharing site into a profitable business.

"In the not-too-long distant future, we actually see a very profitable and good business," Google CFO Patrick Pichette said during a conference call.  "We are really pleased with the trajectory."

Google has been working more closely with Hollywood, agreeing to licensing deals with Time Warner and Walt Disney.  These partnerships will help bring additional professional content to YouTube, which is seen as a necessary step to help attract new advertisers.

Financial analysts are now predicting YouTube will lose between $70M and $500M throughout 2009, so Google's latest attempts to turn the site into a profitable business must succeed.  Despite paying such a heavy price tag in 2006 -- and continually losing money -- YouTube's large viewership could open the door for Google to one day make big bucks, once officials figure out how to woo new advertisers to the site.

YouTube is now attempting to generate revenue throughout the site, though site designers hope to avoid intrusive ads that will drive users away from the site.  YouTube uses banner ads on the front page, text ads that run before, during and after videos, and select videos, such as movie trailers or interviews, are located in a specific area.

"These are not signs of what I call a smart acquisition, these are signs of a dumb acquisition," Global Equities Research analyst Chip Chowdhry told the San Francisco Chronicle.

Google, as it continues to carefully try and woo new advertisers, said the company had "yet to realize significant revenue benefits from our acquisition of YouTube," and that trend is expected to continue through the rest of 2009.  Even if the company is able to begin turning a profit on YouTube, some analysts believe it still won't be enough; for example, Bernstein Research said the ad revenue wouldn't even cover bandwidth and data storage.



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..
By StevoLincolnite on 8/25/2009 9:42:55 AM , Rating: 2
You should have used a picture of Rick Roll instead of Naruto. (Seems more fitting for Youtube, personally).

Unfortunately, being Australian, stuck with Pathetically small download limits, I find that Youtube is a waste of Bandwidth when most video's -I- look for end up being fake, Google should perhaps start making deals with Aussie ISP's to make the website Quota Free, then I'll be on-board.




RE: ..
By dark matter on 8/25/2009 11:19:38 AM , Rating: 4
That is the fault or your ISP, not Google. Ultimately it sounds as though you have no competition, so you may want to speak to your democratically elected representative.

I suggest you invite them onboard your private yacht, offer them tickets for the rugby finals, and maybe "borrow" them a sports car "permanently". You may get somewhere then.


RE: ..
By StevoLincolnite on 8/25/2009 12:07:19 PM , Rating: 2
I never specifically placed the blame on anyone, I know full well the situation and the state of Bandwidth/Backhaul/ISP's and the coming National Broadband Network here.

However if the Advertisements become to data heavy, it will impact allot of peoples Youtube browsing habits here, as everything adds up. (Especially for the poor saps who are on a 10mbps+ connection and only has 200mb of downloads for the month before being charged $150 a gigabyte).


RE: ..
By heffeque on 8/25/2009 12:33:10 PM , Rating: 2
WTF? 200 MB of download? That's crazy. People use more than that with a cellphone alone! How much quota does 3.5G have there? 5 MB? I didn't know that internet over there was so f*cked up :-S


RE: ..
By heffeque on 8/25/2009 12:40:21 PM , Rating: 2
Just for some info... in Spain there's a very good 3.5G coverage and you can get 5 GB plans for 25 euros a month and if you go over the quota, you don't pay more, they slow you down to 128 Kbps and put you back to the usual 7'2 Mbps once another month starts.


RE: ..
By StevoLincolnite on 8/25/2009 1:15:43 PM , Rating: 2
We have that here to, but they speed reduce you to Dial-up speeds instead and whack an "Unlimited" downloads sticker on it.


RE: ..
By StevoLincolnite on 8/25/2009 1:18:54 PM , Rating: 2
Ranges from 200mb at $30 a month then charged at 25 cents per megabyte. ($250 per Gigabyte).

All the way up to 10gb for $130 a month, with speed throttling to dial-up speeds once you have used all your downloads.


RE: ..
By kaoken on 8/25/2009 1:00:05 PM , Rating: 2
200MB limit? LOL what are they doing streaming youtube videos?


RE: ..
By StevoLincolnite on 8/25/2009 1:14:03 PM , Rating: 2
The average Joe doesn't really know the difference between 200MB and 200gb, but when they see an advertisement for ADSL 2+ up to 24mbps with 200mb worth of downloads at a "low price" of only $69 a month, they think they are getting a bargain, hence why ISP's manage to get away with it.

They only realize the mistake at the end of the Month when there bill is a couple of thousand dollars, I once saw one guy who reportedly had a 40 thousand dollar bill on a 200mb plan after he downloaded almost 300gb in a month.

The funny part is, consumers KEEP falling into the trap, so companies keep leaving the trap in place as they make a massive amount of money.

A 200mb plan is fine, if all you want to do is check your email once a week, and want something cheap. (Although that specific plan isn't cheap, you would be better off getting a 256k/64k plan for $30 a month).


RE: ..
By sigmatau on 8/25/2009 2:24:38 PM , Rating: 1
Dude, simply put, your ISP is screwing the hell out of you. People can tell the difference between 200MB and 200GB. Are you kidding? One Youtube video can be 200mb.

I couldn't imagine a 200MB cap with dial up. I can download 200mb in about a minute or two. You can't be right. There is no way 200 megabytes is correct. Check your numbers. Loading the front page of Dailytech will probably take up half of that.


RE: ..
By 4wardtristan on 8/25/2009 6:05:10 PM , Rating: 2
yes, but this is the worst case scenario, going through the most expensive isp, telstra

smaller isps such as TPG have much better plans

25gb+25gb 24mb dsl2 for 50$ a month, and you get capped after your 50, not charged extra.

thats more the standard, not this 10gb rubbish this poster speaks of.


RE: ..
By rhangman on 8/25/2009 10:17:07 PM , Rating: 2
Telstra is AU$310 a month for unlimited ADSL2+. No limits, no caps. Expensive but a hell of a lot cheaper than downloading TB's through a 200mb plan.


Profitable but not?
By Trisped on 8/26/2009 5:26:55 PM , Rating: 2
quote:
Even if the company is able to begin turning a profit on YouTube, some analysts believe it still won't be enough; for example, Bernstein Research said the ad revenue wouldn't even cover bandwidth and data storage.

So even if they are making a profit, they aren't?
I expect Google is taking these costs into consideration when determining You Tube's profitability.




they are destroying youtube...
By Silver2k7 on 8/27/2009 6:40:50 AM , Rating: 2
All the comercials you have to click away..

then this video clip is not avalible in your region.. spank you very much google, will they learn to go golobal soon i wonder.




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