MediaFile

Is Google’s message on YouTube starting to get through?

YouTube executives and spinmeisters have been pushing back more aggressively at the perception that the video site is a great big drain on Google’s bottomline, probably  losing $200 million to $500 million a year by some estimates. These execs say that hundreds of major advertisers are taking spots on YouTube against “hundreds of millions” of video views every week.

The problem with this is the lack of precise details. How much revenue is YouTube generating from these monetized videos exactly (even approximately)? And how much does it cost to stream and store those hundreds of millions of videos every week? Google and YouTube decline to provide any numbers other than to say things are moving in the right direction. Wall Street and investors are yet to be convinced.

Goldman Sachs analyst James Mitchell is the latest to have a shot at a respectable estimate for YouTube. He says it will generate around $300 million in 2009. He also thinks the best is yet to come from YouTube — and that Google will see some benefit.

We believe YouTube revenue will grow at 40 percent year-over-year or faster in 2010 as YouTube is generally under-monetizing its home page traffic versus peers, and as its home page is a natural venue for studios to advertise new movies.

For Google investors, the most important part of Mitchell’s analysis is that he thinks display advertising, of which YouTube is a major part alongside DoubleClick, could add 1-2 percent to Google’s revenue growth.

from Fan Fare:

Web video viewership up, but where’s the cash?

Viewership of online videos has continued to rise, as the Nielsen Company showed in a study released this week. As everyone knows, the online video market is far short of delivering solid profits for media and entertainment companies, but one analyst expects the market to reach a critical mass in 2011.online-video

U.S. Web users spent an average of 212 minutes watching online video in the month of July, an increase of 42 percent compared to the year before, the Nielsen study said. The latest spike in online video viewing for July also marked a 12 percent increase over the month before.

Time spent watching YouTube.com, a division of Google Inc was up 39 percent. At Hulu.com, a website owned in part by NBC Universal, Fox Entertainment Group and ABC network, time spent watching online video was up 34 percent.

from Commentaries:

Online video: Revolution, Evolution or Counter-Revolution?

Lots of news in online video world, some potentially significant. 

And some we can only wait and see about.

Google Inc, Cisco Systems and News Corp are separately doing things that could mean sweeping changes in the way video is produced and consumed on the web. Eric Schmidt John Chambers Rupert Murdoch

from Commentaries:

Revolution?

Video compression technology can be interesting, really.

On2 CEO on Beet TVMost people forget how online video worked before YouTube popularized the embedded Flash video player. Remember the frustration of making sure you had the right video player to play this or that web video? It was YouTube that popularized giving people one-click access to videos.

On Wednesday, Google said it had agreed to acquire On2 Technologies, a maker of video compression technology, in a deal that could have sweeping effects for how video works on the web. The Internet search leader has a bland blog post about how it intends to use On2 to innovate in how video working on the Web, but it isn't at all clear how far it Google is ready to go.

On2 stock chart before and after Google offerThere's lots of speculation that Google may choose to open source, or give away, On2's video compression technology, undercutting royalty-bearing video compression technologies in use across the Web. That could undermine Adobe and its widely used Flash player, Microsoft, with its Silverlight alternative, not to mention Apple Inc and RealNetworks. Dan Frommer at Silicon Alley Insider spells out how far-reaching the Google gambit could be.  As a counterpoint, Dan Rayburn of StreamingMedia.com argues the Google move is no big deal.

from Commentaries:

Evolution?

On Cisco System's quarterly earnings conference call last night, Flip camerasCEO John Chambers gave out an interesting tidbit about the demand for consumer video cameras among corporate users.

Recall that in March, the world's largest maker of network equipment for enterprises and telecom carriers, made an underappreciated acquisition of Pure Digital Technologies, the maker of the insanely easy-to-use Flip video camera line. 

Flip video anatomyCisco's CEO said his company had signed a contract to sell $1 million worth of its Flip handheld video cameras to just a single corporate customer. That's a promising sign for a company Cisco paid $590 million to acquire in March. Just 589 more customers to go, John, plus the cost of the software, the chips, the plastic cases and the stock options.

YouTube’s mythbusters: When blogs attack

It’s taken a while but YouTube is officially pushing back at the various estimates on how much money it costs parent Google by satisfying our collective hunger for million of video clips every day. Google paid $1.65 billion for YouTube in 2006, when it bought the site from Chad Hurley and former CTO Steve Chen (pictured).

Various YouTube executives we’ve spoken to privately over the last year have bristled at the idea that they are an expensive experiment for Google without a clear profit-making business model. Google CEO Eric Schmidt took the first step in a change of communications strategy in an group interview with reporters at the Sun Valley conference two weeks ago, and to more listeners on the Google earnings call on Thursday. His central point was that everyone’s favorite video site is on the path to profitability.

On Monday, two of YouTube’s PR executives hit back at some of the myths about YouTube’s business with a blog titled “YouTube myth busting.” These include claims that it only features short-form, grainy user-generated content when in fact it has deals with Hollywood partners and features HD content. They also said more than 70 percent of AdAge Top 100 marketers ran campaigns on YouTube in 2008.

Google’s YouTube money hole not as deep as feared

How much money is Google losing from YouTube?

Not as much as you think, according to a new report by an IT research and consulting firm.

The cost of streaming billions of videos a month, and Google’s difficulties monetizing those videos, has put YouTube on track to lose almost a half billion dollars this year, according to a famous report by Credit Suisse released in April.

But that report failed to take into account key aspects of the Internet infrastructure business that significantly lower YouTube’s costs, says RampRate, a San Francisco firm that consults companies on IT outsourcing practices.

Hulu breaks into top 3 US video sites

Hulu continues its rapid ascent up the video charts, cracking the top three online video sites in the U.S. for the first time in March.

Some 380 million videos were viewed on Hulu.com, up 14.3 percent from February, according to market research firm comScore.

That allowed the NBC Universal and News Corp joint venture to steal the No.3 spot from Yahoo, whose total number of videos viewed in March actually declined by roughly 5 percent from February. Hulu held a 2.6 percent share of the 14.5 billion videos viewed in the U.S. last month.

Could Google buy Twitter? Ask Arrington, then ask Swisher

******We sprinkled updates into this blog. We’re highlighting them like this.******Thanks to TechCrunch, U.S. tech reporters are about to spend another weekend working instead of playing. UPDATE: Or maybe Kara Swisher at All Things D will save them!******Two sources told proprietor Michael Arrington that Google “is in late stage negotiations to acquire Twitter.” He wrote:***

We don’t know the price but can assume its well, well north of the $250 million valuation that they saw in their recent funding.

***

Twitter turned down an offer to be bought by Facebook just a few months ago for half a billion dollars, although that was based partially on overvalued Facebook stock. Google would be paying in cash and/or publicly valued stock, which is equivalent to cash. So whatever the final acquisition value might be, it can’t be compared apples-to-apples with the Facebook deal.

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Why would Google want Twitter? We’ve been arguing for some time that Twitter’s real value is in search. It holds the keys to the best real time database and search engine on the Internet, and Google doesn’t even have a horse in the game.

March Madness: The great CBS experiment

Get your brackets filled out, hand over a few bucks to the office pool manager, and settle in for some March Madness. The NCAA basketball tournament starts today.

Besides terrific basketball, the next two weeks will showcase what is a great paring of old and new media by CBS. Give the folks over at CBS credit, they’ve done a tip-top job of bringing the games to both your television set and your computer.

(In 1999, CBS acquired the rights to 11 years of broadcasting the tournament, paying about $6 billion. It also has the exclusive online rights.)