Will YouTube Be A Billion Dollar Business In 2011?

According to a new report, YouTube could push $1.3 billion in revenues in 2011.

YouTube is continually crushing it in the world of online video. They are the number one destination for online video entertainment, according to comScore, with video content being uploaded to the site at a rate of 35 hours per minute; their partner program has grown to over 15,000 individuals worldwide; and they have recently made major pushes into the fields of live streaming, news and citizen journalism, and original content (see: Partnership with Next New Networks). But how much is YouTube worth? According to a new report, YouTube could push $1.3 billion in revenues in 2011.

Citi analyst Mark Mahaney reported on the YouTube forecast and the details were published in a post by Ryan Lawler on GigaOM’s NewTeeVee. According to Lawler, the update was provided as part of Mahaney’s “Updating The Long Thesis – Five Key Updates” research note issued yesterday morning. In this research note, “Mahaney estimated that YouTube revenues were approximately $825 million in 2010, and are expected to grow to $1.3 billion in 2011 and $1.7 billion in 2012.”

Of course, as you can see from Figure 15 above, the $1.3 billion figure represents the total Estimated YouTube Gross Revenue, before revenue share with partners. After YouTube deducts the revenue shared with its many partners, Mahaney estimates that the Total Net Revenue will grow from $544 million in 2010 to $876 million in 2011. YouTube’s Total Net Revenue will finally break the billion mark in 2012, at approximately $1.1 billion.

What accounts for this upsurge in revenue? For one thing more people are watching videos on YouTube, but Mahoney noted that the amount of advertising on the site has gone up as well. According to Lawler, “Citi’s YouTube Ad Tracking Analysis found that 81 of the top 100 videos on YouTube had some form of advertising against them in its most recent study, compared to 77 in December and 60 a year ago.”

I am going to go out on a limb and say that the Partner Program has been a factor in this increase in revenue as well. These days more and more people are making money through YouTube’s Partner Program and YouTube has reported that the number of partners that are making more than $1,000 per month has increased a whopping 300% since the beginning of 2010. Hundreds of partners are making six figures a year. Those are astounding statistics and, remember, if the partners are making that much, YouTube is also earning revenue of these users video uploads and promotions.

But is YouTube profitable yet? Google has yet to announce that it is profiting from YouTube. But according to Lawler, “Mahaney argues that YouTube is more important than just a profit-making entity – it helps Google compete in the social realm, while also picking up TV ad dollars that are moving online.” Still, with YouTube’s revenue growing at the rate that it is, many industry experts expect that it will reach a profit soon. When? Only time will tell.