YouTube reportedly not profitable

YouTube is a big revenue generator, but isn’t pulling in much, if any, profit, according to a report from the Wall Street Journal.

The online video firm, owned by Mountain View-based Google, pulled in about $4 billion in revenue during 2014, which comes out to a 33 percent jump in revenue compared to 2013, some insiders familiar with the YouTube financials told the Journal.

The sources also said that YouTube is roughly in a break-even mode. A lot of the expenditures for YouTube were linked to paying for content as well as equipment to deliver the videos on the Web.

YouTube accounted for about 6 percent of Google’s $66 billion in revenue during 2014. With 1 billion viewers for YouTube, that level of profit contrasts sharply with Menlo Park-based Facebook, which generated $12.45 billion in revenue and $2.93 billion in profits with 1.3 billion users during 2014.

“The way YouTube is distributed is not always conducive to ad revenue,” said Tim Bajarin, principal analyst with Campbell-based Creative Strategies, which tracks the the technology sector. “The YouTube ads are on the side, but they are not embedded in the programming, like you see in television.” The current YouTube format might be good for consumers, but that doesn’t mean it’s all that great for the bottom line, Bajarin said. “They are going to have to change things up,” Bajarin said.

Or put another way, YouTube is going to have to become more like true television, in which people go TV to find the channels they seek.

“YouTube could do something like Amazon or Netflix, and create its own original content,” Bajarin said.

Facebook and Twitter could pose new challenges to YouTube, because those social networks are creating their own video services. “If YouTube wants to move towards strong profitability, or to be profitable, they are gong to have to take that advertising and make it part of any actual programming,” Bajarin said. “And one way to have control over all that is to create their own content.”

 

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  • SteveD

    Y/T doesn’t make advertisment money if people skip the ads, so make the ads mandatory before bringing up the video. All that I ask in return is that each ad not exceed 30 seconds, and that you only must view one before the desired video is played.

    • milliamp

      I dont want to watch commercials and if they aren’t bleeding cash its not broken. I think there are a lot of other things they could experiment with but haven’t yet.

      They could offer more paid content. They could build in a system for viewers to tip youtubers like twitch has. They could let people pay for premium accounts that offer better features or even get stored on servers with more/better bandwidth.

      They could let people pay to bypass the early length limit for videos. They could partner with some software companies for video editing software or even something like an improved version of xtranormal.

      They could allow businesses and educators hosting content on youtube to use different video players. Youtube’s player doesn’t offer a preview window for instance which is something that could be offered as a premium feature.

      They could even offer faster encoders for people uploading videos to youtube so it didn’t take so long as a premium feature and I think a lot of streamers would pay a few bucks to have more control over their stream. I’ve never really put much thought into it but I’m sure they could do a whole bunch of things before they resort to the need to make youtube suck in order to keep the lights on.

    • Jordan

      Nobody likes content interrupted, commercials are at least half of why I stopped watching TV shows on TV. Besides a majority of youtube videos are ~2-5 minutes long, a 30 second ad is too long as a % of total time. Internet ads for video tend to serve the same ad repeatedly which is a big mistake. Our privacy will be sacrificed for targeted ads here too I’m sure.

      Youtube has implemented paying for individual media and individual premium subscriptions (per channel), These should be lumped together and supplemented with a netflix business model, the slowly transition to a paid but ad free subscription platform option.

      I don’t know a solution to adblocking though, it makes youtube 1000% more enjoyable and I’m sure it’s awful against their operating costs. You can’t tell me google hasn’t developed a way to thwart adblock though.

      milliamp, twitch style user tipping is a great idea

 
 
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