August 24, 2009

Frustrated by a rash of skeptical reports about YouTube's business model, Google Inc. set aside its usual reluctance to discuss the popular video site's financials last month and offered up a juicy hint to Wall Street.

In the not-too-long-distant future, we actually see a very profitable and good business," Google Chief Financial Officer Patrick Pichette said on a conference call. "We are really pleased with the trajectory." The company and observers attribute the newly ascending course to the introduction of new advertising formats, including more lucrative commercials that play before or during videos, and a series of recent partnerships with mass-market content companies like Walt Disney Co.

Obviously, "not-too-long-distant future" still leaves plenty of wiggle room. But Pichette's comment and other public statements have the tech world wondering whether Google's acquisition of the video site three years ago for $1.65 billion is on the verge of paying off.

"Our goal is not just to be a profitable company," said Tom Pickett, director of online sales. "Our goal is to be a huge economic force for our partners and for our advertisers - and in the end, that will benefit our users." YouTube says its improving financial picture is partially due to incremental improvements, but by most accounts, a big part of the story is a recently magnified focus on the bottom line at the behest of an increasingly frustrated Google. The Mountain View search giant has faced growing pressure from investors to justify the acquisition's lofty price.

Source:-http://www.sfgate.com