YouTube completely changed the way we consume media, and it really shouldn’t come as much of a surprise that the Google owned property was the third most visited website in all of 2014. Whether or not you’re looking for videos of historical political debates or clips of thrill seekers tossing themselves off of buildings, YouTube has every and any type of video one can possibly think of.
As the third most popular website in the world with over 1 billion users per month, one would think that that YouTube, which Google acquired in November of 2006, would be a huge moneymaker for the search giant. The reality isn’t quite as rosy.
The vast number of servers required to keep YouTube up and running cost a pretty penny, and nearly nine years under the Google umbrella hasn’t yet turned the popular video sharing site into a profitable entity.
The online-video unit posted revenue of about $4 billion in 2014, up from $3 billion a year earlier, according to two people familiar with its financials, as advertiser-friendly moves enticed some big brands to spend more. But while YouTube accounted for about 6% of Google’s overall sales last year, it didn’t contribute to earnings. After paying for content, and the equipment to deliver speedy videos, YouTube’s bottom line is “roughly break-even,” according to a person with knowledge of the figure.
The problem, according to The Journal, is that most users don’t hop on to YouTube.com and begin exploring. On the contrary, most of the videos consumed on YouTube are the result of embedded links or, in a best case scenario, links to the YouTube website. Indeed, Google has been trying for some time now to transform YouTube into a site people will visit completely unprompted. Suffice it to say, doing so has been an uphill battle for the search giant.
Also interesting is that sites that have traditionally sent throngs of visitors to YouTube are taking steps to keep those visitors on their own sites. The rise of Facebook Video and Twitter’s 2012 purchase of Vine are the two most glaring examples.
Looking ahead, Google isn’t planning to throw in the towel anytime soon. The company will seemingly keep plugging away at original programming options and will continue to tinker with varying advertising options in the hopes that YouTube might one day soon become profitable.
Additionally, it’s worth noting that Google last month paid the NFL a few million dollars for the rights to an “NFL channel” on the video streaming site. The NFL channel on YouTube, as one would expect, will feature interviews, game highlights as they happen, fantasy football advice, post-game analysis, and clips from NFL Network programming.