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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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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.


"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive











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