14 DAY TRIAL // Much like its parent Google, YouTube dominates its market and the site is orders of magnitude bigger than its competitors. Yet, since it acquired it in 2007, Google hasn't been able to make a profit from the video outfit despite increasingly sophisticated monetizing schemes. Lately, Google has become more confident in the site and said it would become profitable soon enough. And now, analysts are predicting 2010 will be the year the site finally starts earning Google money, frankly, not exactly one of the most unexpected predictions.
"Perhaps the main take-away for Google’s display business is that in 2010 we believe YouTube will start contributing positively to EPS. An improving advertising environment certainly helps, but with YouTube monetizing more than 1 billion video views every week, and with strong sell-out rates on its home-page from larger advertisers–we note 90% of the top 50 Ad Age have advertised on YouTube–we believe the site can profitably take share of the branded display & video market," Barclays Analyst Douglas Anmuth writes.
He goes on to estimate that YouTube will bring in $700 million in revenue in 2010, at which point it would be profitable. There's no estimation on YouTube's operating costs, which is the site's Achilles' heel and has been the subject of much debate over the years. One early report put it at a staggering $710 million, meaning that even with the huge bump in revenue, it would still be losing money. However, later analysis came up with a significantly reduced sum as it factored it peering.
In any case, it is very likely that YouTube will reach profitability this year, something Google itself hinted at in summer. A company representative said that the site would start seeing profits "in the not too distant future." Also, YouTube has been ramping up advertising on the site, as well as coming up with some pretty big partnerships which would presumably drive up revenue.