A world without YouTube?

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by Mike
Posted April 9th, 2009 at 8:18 am

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When one thinks of an “over night success” or a company or product that has become so big, so ingrained in our everyday lives that it begins to be used as a verb, you almost take for granted said service.  The service I’m talking about is YouTube.  While it has only been around a few short years,  YouTube has gone from a niche site on the web to an online video powerhouse with millions upon million of users and videos.  What would happen if all of a sudden that resource was gone?

That is precisely the very real possibility that Google is looking at, though not coming out and bluntly saying “YouTube could be on the chopping block”.  You might ask youself why?  Even though it isn’t the most profitable business venture (try not at all), it is a part of not only American society, but also the world.

Even with world domination, I suppose an operating loss of over $470 million in a year would be a hard concept and dollar amount to grasp even with a company market cap claimed to be around $116 billion.  Half a billion dollars is a lot of money to lose regardless of how much you make.

According to an excerpt between Eric Schmidt and the WSJ which said:

going forward, Google would “be more careful with potential large expense streams, which are of uncertain return.”

Again, he doesn’t come out and specifically name YouTube as in trouble or on the list of services to be cut, however after looking at a $470 million loss, one does have to think.

With all of the talk of losing large sums of money and the bleak economy, YouTube is a total freeloader.  According to estimates by Credit Suisse, YouTube will earn roughly $240 million - against a towering operating cost of $711 million again illustrates that YouTube needs to really find some ways to make moeny, lots of it, and fast, much faster than they have been.

While increased traffic will expose more people to ads and thereby generating more revenue, increased traffic alone is not the answer.  Also, the content that Google can monetize isn’t growing as fast as the operating costs and user base meaning that even though they will earn be increasing earnings, those earnings aren’t growing as fast as what is needed.

So is YouTube on it’s deathbed.  Will we begin telling our children in a few short years of this innovative company, “YouTube”, that shook up the early life of online video.  Imagine a world without YouTube.  How many websites, man hours, and money would be spent re-uploading videos to other online services, as with the demise of the video’s host, YouTube, would come a massive amount ofwebsites with embedded video that ceased to work?  While it is far from an apocalyptic event, it is a relatively scary and unwelcome event.  Google will have to weigh the options and decide if they will go the normal corporate route and just axe YouTube and save money, (certainly a valid and respecatble option), or will they continue to support YouTube and stick it out and see what the future brings?

YouTube has in these few years quickly become a household name with a userbase spanning multiple generations and age groups from elementary school all of the way up to more tech inclined senior citizens.  What would you do if  YouTube shut their virtual doors?  Do you run a website or online service that uses YouTube as a backbone?  How or what would you do with the demise of YouTube if it does in fact come to that?  Let out your fears and thoughts below.

Source: Alley Insider

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