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YouTube still not profitable

by Pete Mason on 10 September 2010, 10:25

Tags: Google (NASDAQ:GOOG), YouTube (NASDAQ:GOOG)

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When you spend $1.6 billion buying a company, you have a right to expect some sort of return on the investment.  However, Google CEO Eric Schmidt has confirmed that wholly-owned subsidiary YouTube is still haemorrhaging money, having failed to make a profit since it was purchased in 2006.

Talking to a journalist at a conference in France, Schmidt explained that the video-sharing site was "nearing profitability and its revenue is doing quite well".  He added that "it looks like it's going to be very successful".

Of course, we've heard this sort of thing before.  Last July, Google CFO Patrick Pichette assured investors that YouTube was on the verge of becoming "very profitable", while President of Global Sales Nikesh Arora echoed those sentiments a few months ago.  However, the company is still struggling to bring its books out of the red.

Unfortunately, no-one outside of Google actually knows how much money the video-sharing site has lost.  Generally, the company has played its cards very close to its chest, refusing to disclose accurate details on the subsidiary's performance.  However, some analysts have estimated that the site could be losing up to $500 million every year - though $200 million is thought to be more accurate.

What is certain is that Google is actively - and continuously - looking for ways to make money from the site.  As well as aggressively increasing the number of adverts that appear alongside videos, the company is rumoured to be planning a pay-per-view film rental service to rival those offered by Apple and Amazon.



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