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Google Expects YouTube to be Profitable Soon


google-logoIn 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?

  • http://summitfencesupply.com Jon Mullender

    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

  • http://ayumusoft.com iPhone Game

    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!!!!

  • http://www.writeawriting.com/ WRITE A WRITING

    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

  • http://twitter.com/r34lRockNRolla Dustin Ma

    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?!?!?!??!

  • http://www.writeawriting.com/ WRITE A WRITING

    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

  • http://www.virtual-coach.com/ Barbara Ling, Virtual Coach

    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

  • http://www.spyblogger.com Waqas Lone

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

  • http://www.heilkunde.com schuessler

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

  • http://www.asseenontvpromo.com/ tv fan

    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

  • http://www.hardcameracases.com cases

    “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.

  • http://www.brickmarketing.com Nick Stamoulis

    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.

  • http://blog.fuseworkstudios.com/ James

    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.

  • http://www.ecommind.com Archna Sajwan

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