It’s been around for five years now, though I’d imagine for most of you it feels much longer, but YouTube, now owned by search giant Google is almost becoming profitable according to YouTube CEO Eric Schmidt. NeoWinhave reported he recently told a French University that the website is now close to becoming profitable.
This is important because YouTube hasn’t made a profit since its launch despite generating more than 2 billion views a day. Google paid $1.65bn for the company and, as yet, has not seen a return.
This will become a bigger issue for Google as time goes on. The company’s only revenue streams come from search and advertising, and as they lose market share in both to the likes of Microsoft, their finances could become a problem if they want to continue operating so many branches to their business.
Google made $6.82bn in revenue in the most recent quarter of 2010 and while it’s unknown how much it costs to run YouTube, it’s been estimated at more than $1bn a year. This is no cheap operation.
Google’s CFO Patrick Pichette said the company would not comment on YouTube’s financial arrangements but the news that the website could return a profit soon must surely be good news.
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I don’t know how YouTube affords the bandwidth cost. It has to be huge.