Quote:
Originally Posted by L146705
youtube dosen't make any profit so it was way over priced, they could have got it for a lot cheaper. In the long term I think its a good deal for google as they know how to monitise it also they have cut out msn, yahoo etc.. from the video market. Its also imporatant to note that google was sitting on a cash pile of 10 billion so were under pressure to spend.
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I know most of the reports out there say YouTube doesn't make any money but the reality is nobody knows for sure except YouTube. I'm guessing they already do. They were only backed with $15m and haven't required any more capital. With 100m videos viewed a day that is a shitload of eyeballs and clicks. I think they are starting to get in the black with the increase in traffic and advertising deals.
This article estimates YouTube is pulling in $175,000 a day just from the home page ($5m a month) plus another $75,000 a day in other display ads for a total of $7.5M per month in revenues. Another analyst has pegged YouTube to do $112m next year. I'm sure this would easily cover all the bandwidth costs at these rates.
I agree it's a good deal for google since their market cap increased over $2B just the last week -- so this is a drop in the bucket for them and gets them the #1 video site instantly. Plus, I'm sure their network has enough room to add YouTube's without any major costs involved.
Btw, MSN is working on their YouTube version called "SoapBox" -- we'll see how that does
http://soapbox.msn.com/
Microsoft just seems to always be behind in the internet sector. They just don't get it or don't want to. They could have easily purchased YouTube instead they are going to try and build something from scratch that is already 2yrs behind. The consumer has already decided that YouTube is going to be THE video destination with a 50% market share. It's almost impossible at this point to make people switch a service. It's like when everyone tried to enter the auction business to compete with ebay. There were better services than ebay but they already had the audience.