CFO Patrick Pichette, during the recent Q3 2009 Google earnings call, reported that “YouTube will be very profitable in the not-too-distant future.”
Three years to the day—on Oct. 9, 2006—Google acquired a money-losing but very relevant and useful YouTube.com. The world’s busiest video Website is serving up something like 11,000 videos per second to millions of people around the planet.
That works out to about a million page views every 90 seconds and more than 1 billion—that’s right, with a “b”—videos viewed each and every day. To say YouTube has been a success with Web users would be a gross understatement; traffic like that is simply unprecedented.
When the traffic, content and user numbers are on the table, YouTube looks remarkable. For example, more content is uploaded to YouTube in 60 days than all three major U.S. networks (ABC, CBS and NBC) have broadcast in 60 years.
Here are some more bullet points, courtesy of YouTube record-keeping:
* 20 hours of video are uploaded every minute, or the equivalent of more than 130,000 full-length Hollywood movie releases every week.
* High-definition uploads to YouTube have grown 500+ percent since it launched HD in November 2008.
* Hundreds of movies and thousands of TV episodes are now on YouTube to go with all the amateur videos.
Yes, the numbers YouTube has racked up in a relatively short period of existence—less than five years—are mind-boggling.
“Today, I’m proud to say that we have been serving well over a billion views a day on YouTube. This is great moment in our short history, and we owe it all to you,” Chad Hurley, CEO and co-founder of YouTube, wrote in his Blogspot blog.
“Three years after the acquisition, our platform and our business continue to grow and evolve. We are still committed to the same principles that informed the site early on, but we know things have changed. … There are now more ways than ever to make and consume content, and more of you are looking to turn your hobby into a real business.
“We’re working hard to keep up with the fast pace of technology to bring you everything you would expect from the world’s largest video site: better quality; a full spectrum of choices and tools for users, partners and advertisers; and ways to make the YouTube experience your own anywhere, anytime,” Hurley wrote.
Yet, there’s that proverbial elephant-in-the-room-type problem: YouTube, for all its wonders and super-high traffic, still hasn’t made a profit for its parent company. Oh, it has solid ad revenue; it’s just that costs to maintain such a high-transaction Web business are overwhelming. It’s been estimated that it costs more than $1 million per day to run the company, which is constantly on the lookout for data center locations and computing power.
But let’s face it: Without the deep pockets of the Google mothership, the San Bruno, Calif.-based YouTube would have been toast long ago.
CFO Patrick Pichette, during the recent Q3 2009 Google earnings call, told analysts and media members that “YouTube will be very profitable in the not-too-distant future.”
People can interpret that in as many ways as they want, but the facts remain that YouTube was launched by Hurley and two other former PayPal employees in February 2005, acquired by that major Internet company in 2006 for more than $1.65 billion, and is still in the red.
A lot of people certainly hope that Pichette is right in his prognostication. Yet it remains to be seen as to whether YouTube will become the profitable business that people—especially Google investors—expect.
In the meantime, those videos just keep on coming.