Google Expects YouTube to be Profitable Soon

Friday, July 17th, 2009 by Jordan McCollum

Google Expects YouTube to be Profitable Soon

In its earnings call last night, Google says things are looking up. After a slightly disappointing Q1, Google beat expectations, although its revenue is still growing slowly.

Estimates put net revenue at $4.06B, but Google posted $4.07B, up from $3.89B in Q208 (4.6% growth YOY). Net income for the second quarter was $1.48B, up from $1.25B in Q208 (18.4% growth YOY). Naturally some analysts are disappointed with Google only adding 3% growth over the previous quarter, but considering that Q1 constituted a 3% decline over Q408, it sounds like good news to me.

But even better news: CEO Eric Schmidt says that not only are things turning around (or at least “largely stabilized”), but YouTube will soon enter the realm of profitability. (Or, as one company I worked for optimistically called this, “making the push to cash positive.”)

Senior vice president Jonathan Rosenberg said monetized views on YouTube have more than tripled in the last year. The most popular video website on the Internet will be “a very profitable business for us” in the “not too distant future.”

Also, CFO Patrick Pinchette emphasized that YouTube does have a business model, unlike other Internet startups: “There’s been so much press with all these documentations of massive costs and no business model.”

Another way that Google has been looking to keep the bottom line down? They’ve lost nearly 400 employees in the last three months.

What do you think? Will YouTube soon be profitable, or is Google just trying to make itself look good? Are you disappointed with Google’s slowing growth rate?

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13 comments on “Google Expects YouTube to be Profitable Soon”

Jon Mullender Says:

July 17th, 2009 at 11:40 am

Good article and google is certainly to be admired for their creative marketing skills. I do not like however the ads running in the middle of videos. Off to the right is fine but in the middle of a video that is not cool at all.

Jon Mullender
President
Summit Fence Supply, LLC
iPhone Game Says:

July 17th, 2009 at 12:56 pm

I wonder if this has anything to do with the removal of the embed function on many videos?

iPhone Game’s last blog post..Free Version!!!!
WRITE A WRITING Says:

July 17th, 2009 at 12:57 pm

What I do not get about google is that how come with such a terrific brand presence and trust, it has only been reaping profits through ad words. You tube has got a huge potential to generate income. Its the milk-cow, in fact a solid pillar of the fifth state. But I still do not get it, why does google not monetize it :S

WRITE A WRITING’s last blog post..How and Why to Write a Book
Dustin Ma Says:

July 17th, 2009 at 1:08 pm

In regards to the comment from Write a Writing, with a name like Google and Youtube, doing a quick jump ship to monetizing Youtube could result in a complete failure of the website. Think napster before lawsuit then napster after lawsuit.

Google’s biggest life line is the fact they offer services for free. If they started to charge they would loose a large amount of there base, and in a time where Bing is just starting to get going, you need to play moves like this close to the chest.

Dustin Ma’s last blog post..r34lRockNRolla: @jessicalokum jess do you like it hard?!?!?!??!
WRITE A WRITING Says:

July 17th, 2009 at 1:11 pm

Dustin, the end line of every company is profit and I do not think that by monetizing they will attract writs. It is going slow and steady but a bit too SLOW

WRITE A WRITING’s last blog post..How and Why to Write a Book
Barbara Ling, Virtual Coach Says:

July 17th, 2009 at 3:16 pm

I’m sure there are other sites ready to pounce on becoming the main video tube site…but I cannot imagine folks abandoning Youtube unless the embed feature is removed completely.

Barbara Ling, Virtual Coach’s last blog post..How to dramatically increase your optin list with ease
Waqas Lone Says:

July 18th, 2009 at 3:08 pm

well sounds good….nice to see these stats. Google really knows what to digg of dead, though youtube is so alive
schuessler Says:

July 18th, 2009 at 4:14 pm

youtube is getting more and more part of everyday life. You get children stories, music videos and movies. How much ads are tolerable?
tv fan Says:

July 19th, 2009 at 5:30 pm

I think YouTube will eventually be profitable. However, the question is how many ads do they have to add to the videos to achieve that.

Monetizing video traffic is different from monetizing search traffic.

tv fan’s last blog post..S-Force Green Tea Plus
cases Says:

July 20th, 2009 at 12:27 am

“will soon enter the realm of profitability”

‘Soon’ defined as 1 month, 1 year, or 1 decade from now?!? Gotta love those vague comments from G.
Nick Stamoulis Says:

July 20th, 2009 at 8:58 am

This doesn’t surprise me that they have almost broken into the green zone with this site. I think there are still ways they can improve things on this site though and add some new efforts to increase user experience.
James Says:

July 20th, 2009 at 10:11 am

Ads running in the middle of relevant videos will probably be their strategy. Even though Jon Mullender (who commented first) and myself are not hip to those ads, we put up with them to watch videos for free. I don’t think it will keep the majority of people from watching videos, and it will still be free for viewers.
Archna Sajwan Says:

July 21st, 2009 at 5:08 am

I hope word profitable doesn’t mean that Youtube start charging for uploading the videos.

Marketing Pilgrim