April 14, 2009

Google and YouTube

Not a winning combination it turns out.
From David Silversmith at Internet Evolution:

Google Losing up to $1.65M a Day on YouTube
Google is spending more than $2 million a day on YouTube — and it is nowhere near seeing a return on that investment. Indeed, it may be losing up to $1.65 million daily on the video site.

According to financial firm Credit Suisse and Internet measurement provider comScore Inc., YouTube Inc. is on track to serve 75 billion video streams to 375 million unique visitors in 2009.

That's the good news. The bad? To support those visitors, Google (Nasdaq: GOOG) will spend more than $2 million dollars daily — to be exact, up to $2,064,054 a day, or $753 million annualized, according to Internet Evolution calculations of YouTube's costs derived from a range of sources, including Bear Stearns & Co. Inc. , comScore, Credit Suisse, and Google itself.

Now, Google does not disclose sales figures by division, so there is no definitive revenue number for YouTube. The range of estimates from financial analysts stretches from a low of $90 million (Bear Stearns) to a high of $240 million (Credit Suisse).

All the numbers are well below the estimated maximum of $753 million Google is spending annually, based on our calculations. So, depending on whose version of revenues you accept, Google is losing anywhere from $513 million to $663 million annually on YouTube, or anywhere from $1.4 million to as much as $1.65 million every day.

Hat tip to Slashdot — lots of good commentary there.

Posted by DaveH at April 14, 2009 11:36 AM | TrackBack
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