YouTube Infrastructure Costs Vastly Overestimated: Report

GigaOM (Jun 17 2009)

1. YouTube is much closer to breaking even than widely thought, says a firm with intimate knowledge of global infrastructure costs. A widely publicized Credit Suisse report that said Google would lose $470 million on the site this year neglected to account for factors such as peering traffic, wholesale bandwidth deals and cheap data center locations. Where the bank said YouTube’s costs will amount to $711 million in 2009, RampRate, a San Francisco-based company that advises large companies on IT infrastructure, says the actual cost is $415 million. Given Credit Suisse’s revenue estimate for YouTube, that would give the site an operating loss of $174 million this year. If you use other people’s revenue numbers — for instance, Jefferies said $500 million — the site would actually turn a profit. (Read Full Article)

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