YouTube to lose USD470m, claims analyst

Mon Apr 6 2009, 17:46 PM

YouTube is set to lose USD470m this year due to high bandwidth costs and expenses, claims Credit Suisse analyst Spencer Wang. This loss will come in spite of an overall 20% year-on-year increase in revenues, he says.

Wang estimates that in 2009, YouTube will make USD241m in revenue. This will come from the video site's various ad formats, including home-page, banner and video overlay ads, as well as sponsored videos and links. This will trump YouTube's 2008 revenues, estimated at USD200m.

However, Wang claims that these gains will be offset by USD711m in costs. Roughly USD360m of these expenses will come from bandwidth charges, with the rest going on content acquisition, licensing and other costs involved in running the site. This will result in a total estimated loss of USD471m.

Some commentators claim the estimated bandwidth expenses may be exaggerated. Wang says he bases the figure on estimated unique visitors against the bitrate demands of streamed videos.

YouTube is not the only site suffering expensive hosting costs. Last month, reports claimed Facebook is seeking USD100m in funding as it struggles to keep up with server costs for its rapidly expanding network. The social network is also set to launch a new storage system this week to help it cope with the huge numbers of photos uploaded to the site.

Wang claims that YouTube can improve its performance by closing more deals with major entertainment firms. Improving the detection of unauthorised videos would help unlock ad capabilities for these firms. Wang also claims ad efficiencies can be improved by standardising the ad formats used on the site.