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This year alone, analysts expect Google to lose between $70 million and $500 million on its grossly popular video site. Despite being in the red, YouTube has seen an explosion in popularity and viewership. That wide userbase may eventually turn a nice penny for the search company, as they work to coax new advertisers to the site.
Google has been working more closely with Hollywood, inking deals with Time Warner and Walt Disney. By signing those agreements, they hope the additional professional content will lure more advertisers. Although the company seems optimistic about YouTube's future, analysts offer a polarized outlook about the service's ability to generate profit.
"These are not signs of what I call a smart acquisition, these are signs of a dumb acquisition," said Global Equities Research analyst Chip Chowdhry. Bernstein Research believes that even if the company begins turning a profit, it won't be enough to cover costs associated with bandwidth and data storage.
User Comments: 5
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JDoors said:
I think they need to spend some of that Hollywood money on site design and video presentation, otherwise, Hulu's gonna have 'em for lunch.
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Twister123 said:
hulu only stream's within the u.s, youtube can get the rest of the market if the do things right , like eliminate breaking a movie into 20 ten minute bits , that's really annoying .
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Captain828 said:
IMHO, I don't think those two analysts know what they're saying... Google can, and probably will, make a special pay-per-view channel, or something of the sorts, where they'll add various Hollywood movies.
Given it's immense popularity, I think profits might actually give YouTube a very high return rate for Google and then bringing hefty amounts of cash.
Though Hulu is relatively popular, YouTube is worldwide popular and besides that, I doubt Hulu has Google's deep pockets to discuss a long-term relationship with the major studios.
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Though Hulu is relatively popular, YouTube is worldwide popular and besides that, I doubt Hulu has Google's deep pockets to discuss a long-term relationship with the major studios.That said, Hulu already does have an inside track with many large studios.
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JDoors said:
We'll see what Google can do with YouTube. As it stands, I'll suffer watching YouTube videos only because it has such an extensive base of random content, but when I want to watch something IN PARTICULAR, I use Hulu.
As for international reach, YouTube MIGHT have enough money to purchase international rights for Hollywood content, but it's not yet clear if that will be their model.
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