YouTube Revenues Could Pass $3.6 Billion in 2012: Citi's Mark Mahaney
Is Google making money off of YouTube? You betcha, Google execs told shareholders today, without offering the slightest bit of detail. Par for the course. — So in lieu of real numbers from Google …
Context & Ripple Effects
Google executives told shareholders this week that YouTube is making money, but offered no figures — continuing the company's long-standing refusal to break out the video site's financials. Citi's Mark Mahaney is stepping into that disclosure vacuum with an estimate that YouTube revenues could pass $3.6 billion in 2012.
The estimate matters because it gives investors an outside benchmark for a business Google itself will not size, and it frames YouTube as a material revenue line rather than a strategic side bet.
First-order effects
- Investors now have a concrete number — $3.6 billion — to attach to YouTube, replacing management's unquantified profitability claim as the working figure for valuing the business.
- Mahaney's projection raises the bar on Google's shareholder communications: a named analyst estimate invites direct comparison the next time Google reports results without a YouTube breakout.
Second-order effects
- Media companies and advertisers negotiating video ad deals gain a public reference point for the scale of YouTube's inventory, sharpening pricing conversations with Google's sales side.
- Rival video platforms face investor questions benchmarked against the $3.6 billion figure, pressuring them to disclose or defend their own video economics.
Third-order effects
- If analysts continue substituting estimates for absent disclosures, the gap between Google's aggregate reporting and its segment economics becomes harder to sustain, pointing toward eventual forced granularity in how Google reports YouTube.
- Video advertising consolidates its status as a core, separately-scrutinized business line rather than an experimental adjunct to search.
The trend: Analyst estimates are filling the disclosure vacuum around YouTube's finances, building pressure on Google to eventually report the video business as its own revenue line.