Google keeps pretty mum on the subject of YouTube revenue, leaving it to analysts to guess what kind of take the service racks in. Analysts from Morgan Stanley recently took a crack at it. They predict the company will reach $20 billion in gross revenue by 2020 to generate $5 billion in operating income, CNBC reported.
The research analysts based their math on YouTube’s current share of the video advertising market. For this year, the firm expects YouTube to earn $4 billion in gross revenue and $711 million in operating income. YouTube currently sees an average of a billion users on a monthly basis.
The firm is basing YouTube’s worth solely around its advertising platform, and not a recently announced paid subscription service that not even Google is positive will work. Earlier this month, Google announced a plan to sell paid subscriptions to certain video feeds. The first paid channels appeared shortly following Google’s announcement. Subscriptions range from 99 cents to $7.99 a month.
YouTube has established 30 partners for these paid video subscription channels. Other video producers will soon be able to establish their own paid channels as well. Self-service was key to Google’s design.
“As we roll out wider and as we roll out self-serve, you’ll see a lot of innovation,” Malik Ducard, the director of content partnerships for YouTube, told the New York Times.
The plan would give video producers an additional way to profit beyond advertising, which some providers have been disappointed with. YouTube, naturally, also gets a new form of revenue, assuming the overall web community actually buys into it.
And that could be a big assumption, especially since many of the producers themselves have yet to bite. A number of producers that were asked to launch a paid subscription model refused, the Wrap reported.
“There are individual channels rather that are going to alienate their audiences,” Sarah Penna, the co-founder of MCN Big Frame, told TheWrap. “There is so much content on YouTube that if somebody throws up a paywall, people will say, ‘Screw you, I’m going to go watch the 10 million other channels that are free.”
While additional revenue would be an extra layer of Grey Poupon on Google’s sizable income sandwich, it’s clearly not depending on YouTube’s paid subscriptions panning out. Google is already making money hand over fist on its current revenue model for YouTube. Anything more is just additional cream off the top.