Youtube Worth $1.1 Billion

Monday, March 8, 2010

Because Google discloses almost no information about YouTube's financial performance, the best anyone can guess is to make just that, an educated guess. Youtube, the world's biggest video site, will generate over $1.1 billion in revenue by 2011. Google will keep about $700 million of that.

According to Mark Mahaney from Citigroup's, who estimated the revenue of Youtube noted that the site is continually growing and that it is rapidly placing more ads on more videos.

To explain the outrageous figures that YouTube is supposedly taking in Mahaney explains the logic. He takes Myspace's revenue-to-page view ratio and applies it to YouTube, shown in the table to the right.

If you want to play analyst, you can tweak Mahaney's math based on your own assumptions. If you think Google (GOOG) is doing a better or worse job at selling ads than News Corp.'s (NWS) site, you might want to adjust the estimates accordingly.
If you believe YouTube generates much more traffic than comScore (SCOR) counts- which Youtube's people like to hint at even though they will never come out and say it- you could tweak it again.

2 comments:

Julia Robinson March 9, 2010 at 11:03 AM  

First of all: wow! It is amazing to me to think that a simple website like Youtube can be making that much money. Also, the fact that Google gets to keep so much of their revenue is very interesting.

I liked your concluding paragraph and how you give the reader the option to the do the math themselves if they'd like. You've got me interested!

Tyler Lloyd March 9, 2010 at 11:46 AM  

I could see YouTube making a load or money off the advertising side. It is one of the most highly visited sites on the internet so any company looking to advertise should be willing to pay loads of money to get it on YouTube because millions of people will see the ad. YouTube could take this their advantage and set a higher price for that advertising that many sites can't because of their size and prominence.

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