YouTube: News report says it's not growing (revenue) as fast as some thought

Google’s YouTube is widely viewed as an Internet success story, with millions of hours of new video drawing billions of viewers every month.  But a new report says YouTube chief Susan Wojcicki has her work cut out for her.

While YouTube is profitable, it may not make as much money as some analysts thought, according to an article in The Information blog (subscription required) by former Wall Street Journal reporter and longtime Google-watcher Amir Efrati. Citing two unnamed sources, Efrati writes that YouTube had about $3.5 billion in advertising revenue last year, or $1.5 billion in net revenue after sharing with content providers.

Google doesn’t release financial details for YouTube, so it’s difficult to confirm Efrati’s report.  But the research firm eMarketer projected a few months ago that YouTube had $5.6 billion in gross revenue last year, with $2 billion in net revenue. Two years ago, a stock analyst at Citi estimated YouTube would hit $3.6 billion in gross revenue for 2012, with net revenue of $2.4 billion.

YouTube may also be falling short of another internal – albeit audacious – goal of increasing viewership to 1 billion hours a day, according to Efrati’s report:  He writes that YouTube has increased viewership from 100 million hours a day in 2012 to 300 million hours a day today.

Wojcicki, who took over as head of YouTube earlier this year, is widely credited with overseeing tremendous growth in her previous position as head of Google’s core advertising business.  And she isn’t sitting on her laurels: She’s reportedly working hard to expand her relationships in Hollywood and the ad industry, while working on plans for new subscription-based video channels and a separate service for kids.  The Information also says she led the recent, though not yet conclusive, effort by Google to buy the popular video-game live-streaming service, Twitch.

As we’ve reported before, Facebook, Netflix, Yahoo and other companies are also jockeying to compete in the online video business. But one analyst says the industry is still in its early days. In a recent note to investors, Carlos Kirjner of Bernstein Research said Facebook and YouTube are still developing new methods for measuring users’ interest, which could help draw more advertisers in coming years.

(Photo of Susan Wojcicki at Google headquarters by LiPo Ching/Mercury News)

 

Brandon Bailey Brandon Bailey (350 Posts)

Brandon Bailey covers Google, Facebook and Yahoo for the San Jose Mercury News, reporting on the business and culture of the Internet.