Case Study on ?

By: Sunil Kumar

August 1, 2007

Youtube- Video sharing site.

Founded by• Ched Hurley (Left)• Steve Chen (middle)• Jawed Karim (right)

Table of content

• Dates and figures.

• Facts about youtube.

• Factors which made youtube a hit.

• Launch and Marketing strategy.

• Exit analysis.

Dates and Figures.

• Founded on 14th February, 2005.

• Launched its product in May 2005.

• Got their first funding of $3.5mn from sucoia capital in October 2005.

• Got the second phase of funding of $8mn from sucoia capital in April 2006.

• Acquired by google in $1.65bn in October 2006.

Facts about Youtube..

• Fastest growing website in internet industry.• On average 100mn videos streamed per day.• 65,000 videos are uploaded daily.• You tube has 45 terabytes = 45,000 GB of

videos• More then 13 million new users every month.• An average user spends 30 min on you tube

Facts about Youtube..(contd)

• 58% of internet videos are watched on you tube.• 4th most visited site of the world.• Accounts for 10% of total internet traffic.• $1mn per month is the cost of bandwidth needs

to support such a heavy traffic.• The total time people spent watching Youtube

since it started till it was acquired was 9,305 years.

Key Issues in video sharing.

Lack of viable storage platform

Mediocre watching experience.

Fragmented viewer experience.

Youtube - Right technology at the right time.Videos are encoded in

flash format.Tagging of videos

made it more searchable.

What are the other factors which made the company a big hit?

1.) Widget Marketing:• You tube allowed user to embed video on their

own webpage or blog.• It was popular in social networking sites like

MySpace which indirectly increased the page rank of videos in google search.

2.) Distribution of popular content:• Popular television clips and hard to find video clips.• Saturday Night Live• User uploaded copyright content.• No registration required and no player need to

download.

3.) Right technology for the desired user experience:

• Videos encoded in flash format.

4.) Environmental factors:• Bandwidth become cheaper, faster and ubiquitous.• Online social networks like myspace had already

attained critical mass.• Video producing technology become more cheaper

e.g digital camera, mobile phone with camera.• People seeking online entertainment source.• Platform side technology become cheaper.

Launch and Marketing strategy.

Launched in May 2005: • Launched as video clone of HotOrNot.com• Targeted mainly young adult market.

Revamped in June 2006:• Creating a general purpose video sharing site.• Increasing number of views by offering related

content.• Interaction between users.• Offering a video player which could embed on a

site like myspace.

Promotional tactics which proved ineffective:

• Advertisement on craiglist.com• Asked women model to upload their videos.

Tactics which actually helped to increase the user base:

• Myspace :Although it blocked youtube once but had to allow it later.

• Tsunami footage videos bought the largest traffic spikes.

• Distributed i-pod nano for few months to attract users which results more then a million views per day.

• Search engine optimization.

Exit Analysis

• You tube was acquired by Google in $1.6bn.

• Sequoia, who invested $11.5mn in two phases has 30% stake in you tube which worth around $495mn.

ROI = 43x• Ched Harley (CEO) got $345.6mn• Steve Chen (CTO) got $326.2mn• Jawed Karim got $64.6mn

Was $1.6bn acquisition justified?

You tube potential revenue.

You tube is wildly profitable.

$7.5mn/month revenue from ads.

= Nearly $100mn/year

Could go up to $400mn/year

Next target?

$75bn tv adv industry.

What else did youtube brings to google other then business?

Issues

• Copyright content distribution issue.

• Viacom sued google for 1bn

Actions taken• Google has almost

developed copyright content filtering system

• Google removes the content after the owner claims for copyrighted content.

Thank you