Some of our favourite internet destinations have not feared well in the recession as many had hoped/figured.
See below:
YouTube losses mount; ties up with Disney, Universal
Video advertising was supposed to be one of the bright spots in the recession, a nascent area that would boom despite the economy. While video ad growth is up, it's not up enough. Video site Veoh announced its CEO was departing along with job cuts; Hulu is having trouble selling ad inventory; and video giant YouTube could lose $470 million this year, according to Credit Suisse. The analyst believes YouTube will bring in $240 million in revenues this year, up 20% from last year, but that won't keep up with expenses that could hit $711 million – including $1 million per day in bandwidth costs. While Benjamin Wayne at Silicon Alley Insider said the prognosis was "grave" for YouTube, the video behemoth told AdAge it was now selling ads on 9% of videos, up from 6% last year. Not only is YouTube going to push more professional content with a deal with Disney and a new joint venture with Universal Music (dubbed Vevo), but it was also cashing in with Content ID, a technology that lets it serve ads on copyrighted clips uploaded by users.
ClickZ reported that YouTube would redesign its site soon with a greater emphasis on ad-ready professional content, with tabs for Movies, Music, Shows, and Videos. Only the Videos tab would include amateur user-generated content. Plus, the look and feel of pro videos on YouTube would mimic that of rival Hulu. Meanwhile, Hulu's growing popularity was outdistancing its ad sales, according to BusinessWeek. A Screen Digest analyst, Arash Amel, said Hulu would bring in just $120 million in ad revenues this year, down from an earlier prediction of $180 million by the same firm. Amel said the site had only sold about 60% of ad inventory, with the rest taken up with public service announcements. "What we've seen is rapid growth in consumption, but the advertising isn't keeping up," he told BusinessWeek. While Disney had kept its video offerings on its own sites, it now has a deal in place with YouTube and rumors swirled that it would soon make a deal with Hulu to become a stakeholder in the startup.
Analysts Estimate YouTube's Losses At $470M This Year (WebProNews)
YouTube May Lose $470 Million In 2009: Analysts (MultiChannel News)
YouTube Is Doomed (Silicon Alley Insider)
YouTube Plans Redesign to Highlight Premium Content (ClickZ)
YouTube Moving the Needle on Ad Sales (AdAge)
Hulu Makes Room for a Third: Disney Deal Coming Soon (AllThingsD)
Hulu Attracts Crowds but Not Ads (BusinessWeek)
Disney-Hulu Deal Done (Silicon Alley Insider)
Job cuts, new CEO at online video titan Veoh (AFP)
Facebook pitches Madison Ave. as CFO departs
YouTube is not alone in its struggle to find profitability for its largely user-generated content. Count Facebook as another popular site that still can't cash in. The social network hit 200 million users, but could be burning through $20 million per month in funding with its big international staff and user base, according to TechCrunch. Plus, Facebook's CFO Gideon Yu left the company due to internal struggles with CEO Mark Zuckerberg, according to AllThingsD's Kara Swisher, as the recession also hit the company's revenues.
Still, Facebook put on a happy face, with COO Sheryl Sandberg telling Madison Avenue that advertising was working on the site, which expects a 70% increase in ad sales this year and has had positive EBIDTA the past 5 quarters. But that's not the same thing as actual profit, Gawker's Owen Thomas pointed out. Forbes' Taylor Buley finds that clickthroughs on Facebook ads are a paltry 0.5%. "With its user base doubling and Balkanizing into increasingly small segments, Facebook could have trouble reaching profitability by pitching small- and medium-sized advertisers at the rates it currently recommends," Buley wrote. The question is whether Facebook ad revenues can keep up with rising costs of serving all those users.
