- It’s been 13 years since Google acquired YouTube back in 2006.
- Expectations were high when Google shelled out US$ 1.65 billion in stock to buy YouTube, which was less than two years old and unprofitable at the time.
- CEO Susan Wojcicki said more than two billion users log in and watch videos every month
PayPal’s three early employees-Chad Hurley, Jawed Karim and Steve Chen formed YouTube in 2005. When establishing YouTube, there are conflicting stories about the meaning and motivation. Many say the difficulty in sending a video file via email motivated them. Some say they began YouTube inspired by the Hot or Not website and planned to make a video version of an online dating site. Whatever be the actual reason, none of them could have imagined that time that one day the company will make 20 Billion Dollars a year!
It’s been 13 years since Google acquired YouTube back in 2006. What was once a fast-growing internet video startup has become an essential part of the marketing empire of the parent company Alphabet Inc.
Expectations were high when Google shelled out US$ 1.65 billion in stock to buy YouTube, which was less than two years old and unprofitable at the time. The deal was not risk-free, as the platform made enemies over copyright issues in the media industry.
But for most analysts, the appeal was plain to see, as YouTube had accrued about 50 million users worldwide quickly. In the fight to purchase the platform, Google reportedly defeated competitors including Microsoft Corp. and Yahoo.
Canaccord Genuity analysts estimate that the platform will produce more than US$ 20 billion in revenue this year — that’s roughly the same amount of revenue as McDonald’s Corp and it would mark an unprecedented 400 percent increase over the next five years.
Those eyeballs continuously watching content fuel the massive pile of advertising money from YouTube — everything from music videos to the new uploads from top influencers. While Alphabet does not disclose the financials of the platform, CEO Susan Wojcicki said more than two billion users log in and watch videos every month, at the company’s brand cast marketing event in May.
Rapid growth can, of course, cause increasing pain. One high-profile problem in the case of YouTube has been the proliferation of hateful content on its website— a topic that is constantly discussed by Wojcicki and Google CEO Sundar Pichai.
Nevertheless, advertisers are still gravitating to YouTube, partially because of their appeal to younger viewers. A new survey conducted by investment firm Piper Jaffray found that 37 percent of U.S. teenagers get their daily video streaming fix from YouTube, compared with 35 percent for Netflix Inc. and only 12 percent for cable TV.
It was again the second largest contributor to revenue growth,” Alphabet Chief Financial Officer Ruth Porat told analysts about the second-quarter earnings performance of the company in July.
Easy accessible and affordable internet has made ways for video platforms like YouTube and TikTok to penetrate into Tier 3 and 4 cities of the developing countries that have largely contributed to its user base. The growth seems never-ending and so is the revenue.