> I know advertisements are a thing for YT, but is it enough?
Yes, it is -- virtually certainly. We can assume YouTube is profitable. It's not broken out directly in quarterly reports, but it doesn't make any sense that Google would still be running it after all these years (almost 20) if it weren't.
But obviously YouTube didn't start out as profitable. You need scale, which provides two things:
1) Marginal storage and streaming costs go down (Google is big enough to save huge amounts of money by running its own data centers, peering agreements, caching near customers, etc.)
2) More advertisers running more ads that can be targeted to more users whose preferences you know more about
So no, you can't run it profitably.
This is a classic example of a business that is only profitable at scale, that needs to lose a lot of money at first as it grows until it achieves scale. And it's not just scale on the traditional tech/users side, it's scale on the advertising side as well -- advertisers aren't going to bother running ads on your platform until you have enough users for them to care.
It's also pretty strongly a "winner-takes-all" network effects situation, where video publishers want to put up their videos where the viewers are, and viewers want to visit the site where all the content is. So if you wanted to create a YT competitor, I don't know how you'd convince content creators to post their videos to your site in addition to YT, or how to convince consumers to watch said videos on your site instead of YT.
Also scale on the supply side. It took time to get to a place where obviously the video should be on Youtube, and that's hard to replicate.
This applies to the content which would exist anyway, and then doubly to content created for Youtube. Grand Pooh Bear would be on Twitch anyway, but it doesn't really make sense for a Tom Scott, let alone "Corrections" which is a Youtube-only addition to Seth Myers "Late Night" show.
Likewise until it gets fairly "big" it doesn't make sense to officially put your music videos on Youtube. Today that's basically the main way they're getting seen.
> I know advertisements are a thing for YT, but is it enough?
Yes, it is -- virtually certainly. We can assume YouTube is profitable. It's not broken out directly in quarterly reports, but it doesn't make any sense that Google would still be running it after all these years (almost 20) if it weren't.
But obviously YouTube didn't start out as profitable. You need scale, which provides two things:
1) Marginal storage and streaming costs go down (Google is big enough to save huge amounts of money by running its own data centers, peering agreements, caching near customers, etc.)
2) More advertisers running more ads that can be targeted to more users whose preferences you know more about
So no, you can't run it profitably.
This is a classic example of a business that is only profitable at scale, that needs to lose a lot of money at first as it grows until it achieves scale. And it's not just scale on the traditional tech/users side, it's scale on the advertising side as well -- advertisers aren't going to bother running ads on your platform until you have enough users for them to care.
It's also pretty strongly a "winner-takes-all" network effects situation, where video publishers want to put up their videos where the viewers are, and viewers want to visit the site where all the content is. So if you wanted to create a YT competitor, I don't know how you'd convince content creators to post their videos to your site in addition to YT, or how to convince consumers to watch said videos on your site instead of YT.