• WebProNews, Monday, April 6, 2009 12:04 PM

Google is not going to stop paying for its $1.65 billion acquisition of YouTube anytime soon, argues a new report from Credit Suisse analysts Spencer Wang and Kenneth Sena. The "math is pretty simple," too, says WebProNews. YouTube will generate around $240 million in revenue this year, but its expenses could add up to roughly $711 million.

The biggest and most unavoidable expense is bandwidth, notes Todd Spangler of Multichannel News. "Bandwidth accounts for about 51% of expenses -- with a run rate of $1 million per day," he says, noting that content licensing accounts for another 36% of YouTube's expenses.

"In our view, the issue for YouTube going forward is to increase the percentage of its videos that can be monetized (likely through more deals with content companies) and to drive more advertiser demand through standardization of ad formats and improved ad effectiveness," the Credit Suisse analysts said.

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