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YouTube: 1 Billion Viewers, No Profit

YouTube 1 Billion Viewers No Profit WSJ

YouTube 1 Billion Viewers No Profit WSJ


Google Inc. nurtured YouTube into a cultural phenomenon, attracting more than one billion users each month. Still, YouTube hasn’t become a profitable business.

The online-video unit posted revenue of about $4 billion in 2014, up from $3 billion a year earlier, according to two people familiar with its financials, as advertiser-friendly moves enticed some big brands to spend more. But while YouTube accounted for about 6% of Google’s overall sales last year, it didn’t contribute to earnings. After paying for content, and the equipment to deliver speedy videos, YouTube’s bottom line is “roughly break-even,” according to a person with knowledge of the figure.

By comparison, Facebook Inc. generated more than $12 billion in revenue, and nearly $3 billion in profit, from its 1.3 billion users last year.

The results reflect YouTube’s struggles to expand its core audience beyond teens and tweens. Most YouTube users treat the site as a video repository to be accessed from links or embedded video players posted elsewhere, rather than visiting daily. Google executives want them to turn on YouTube the way they turn on television, as a habit, where they can expect to find different “channels” of entertainment.

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Perhaps when YouTube has $12 billion in revenue, it too will have $3 billion in profit.

If YouTube really wants us to come to daily, they need to do a better job of recommending videos.

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