Google's YouTube may be dominating the online-video market, but that's not translating into profitsat least not yet. Just how much it's losing a subject of great debate. In a report today, CreditSuisse analyst Spencer Wang estimates that the site will lose $470 million this year. Wang says YouTube's revenue will jump 20 percent to $240 million (that's higher than our own estimate) of $150 million, from ad revenue), but that the increase will be offset by a staggering $710 million in costs. More than half of that comes from bandwidth costs, which Wang puts at $360 million.
Wang does say that there are a number of ways that YouTube can improve its financial results, including improving the effectiveness of its ads and striking more deals with entertainment companies. The latter is already happening, judging from the deal YouTube struck with Disney (NYSE: DIS) earlier this week to share ad revenue from clips Disney puts on the site.
By Joseph Tartakoff