Google sees YouTube profitable in near future

NEW YORK Fri Jul 17, 2009 1:41pm EDT

An employee rides her bike past a logo next to the main entrance of the Google building in Zurich July 9, 2009. REUTERS/Christian Hartmann

An employee rides her bike past a logo next to the main entrance of the Google building in Zurich July 9, 2009.

Credit: Reuters/Christian Hartmann

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NEW YORK (Reuters) - Web video site YouTube will be profitable for Google Inc in the near future, the Internet search leader said on Thursday.

Google acquired YouTube for $1.65 billion in 2006, but has lost money on the site that lets people post and share videos free.

Analysts have raised concerns about the huge costs involved in streaming millions of videos with only a tiny swathe of them being supported by advertising.

"YouTube is now on a trajectory that we're very pleased with," Google Chief Executive Eric Schmidt said during an earnings call on Thursday.

He added that Google is helping marketers and advertising agencies create "great ads easily" for YouTube.

Google executives have recently made bullish remarks on YouTube's revenue growth. Schmidt told reporters at the Sun Valley technology and media conference this month that new advertising formats, such as pre-roll ads that appear before a Web video program, will draw in more revenue.

On Thursday, Google's head of product management and marketing, Jonathan Rosenberg, said "monetized views" -- people viewing videos that are supported by advertising -- more than tripled in the past year.

"We're now monetizing billions of views of partner videos every month," he said.

In response to an analyst question, Google Chief Financial Officer Patrick Pichette said recent efforts to introduce new ad formats and promote videos have helped to establish YouTube's home page among advertisers as relevant and "desirable for customers."

"We're really pleased both in terms of (YouTube's) revenue growth, which is really material to YouTube, and... in the not long, too-long-distant future, we actually see a very profitable and good business for us," Pichette said.

Google reported a quarterly profit on Thursday that beat Wall Street expectations, but its revenue growth was not as stellar as some investors had hoped, sending its shares down nearly 3 percent.

(Reporting by Anupreeta Das; Editing by Tiffany Wu and Tim Dobbyn)

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