Can YouTube Monetize the Hulu Way?

    April 21, 2009
    Chris Crum

Market research firm eMarketer has some interesting numbers looking at possible YouTube revenue. The firm pulls from a variety of sources to get a feel for just how the popular Google-owned video site is doing.

For starters, they refer to YouTube as the fifth most popular US web brand according to Nielsen, though March saw the site drop slightly to number 6.

Nielsen -  Web Brands

"Credit Suisse estimates that 41% of all US video streams will go through YouTube in 2009, and the site will see 375 million unique viewers worldwide," reports eMarketer. "But if you thought that time spent and a high usage rate would equate to big business for the video giant, you would be mistaken."

They quote estimated YouTube revenues for 2008 and 2009. The estimates are quite varied, but none of them exceed $500 million, and the rest are significantly lower. eMarketer then cites analyst estimates for how much it costs to keep YouTube running.

"According to Multichannel News, Credit Suisse analysts project that YouTube bandwidth costs, content licensing agreements, hardware needs and other expenses will reach over $700 million in 2009," they say.

eMarketer’s conclusion is that YouTube is unprofitable, and that they need to form more partnerships and offer more premium content, which can be more easily monetized.

Well, we’ve just started to see the beginning of this. Last week, YouTube kicked off its offering of movies and shows, as reported by WebProNews here (then there’s the Universal parternship on Vevo, which has potential). While this is certainly a step in the right direction for YouTube, it’s going to take more than what they’ve got at this point to compete with Hulu and other online video destinations.

Yes, YouTube dominates the online video picture in terms of total number of video streams and unique viewers by a longshot according to Nielsen’s Online VideoCensus, but you won’t find hit shows like The Office, or House on YouTube. You’ll find crazy old shows like "My Mother the Car" and maybe some MacGuyver.  I think you get the point.

It’s not that YouTube doesn’t have any current major studio content, but it’s going to take more than what it’s got if it wants to monetize the Hulu way.