Friday, January 16, 2009

Kill YouTube

Google Video is no more. And how long before YouTube follows ?

Google is a young company full of hubris and hope. These are great convictions and the company is amongst the most admired in the world as a result.

However, the company needs to stop, single handedly, subsidising the delivery of most video content online. It is not doing itself any favours, and is actually returning zero benefit to content owners. 

Any player that has more than 25% of a market is considered to be moving towards a monopoly, so the regulatory authorities in the UK and US should help to put Google out of their video misery if they will not do it themselves...

As DivX did before, Google should shut down YouTube, or at the very least run it as  a commercial service by cutting out any non-revenue generating content, or charging for the service (which would actually kill it anyway...).

My estimate is that Google is generating well under $100m of revenue from YouTube (it could be as low as $30m in  pure terms), with $1.2bn of costs. If you include all hosting costs, e.g. power, then the real costs may be closer to $1.8bn p.a. in my estimation.

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