In 2008, I'm impressed with any online video company barely breaking even. I figure today's ventures are just attempts to build a brand in anticipation of when costs come down and profitability is realistic.
I just reran the numbers a bit through S3 calculator and came up with 780K per month at that traffic level, so costs are already dropping but still not a very big profit margin, and that is assuming you can put ads on all your videos and you get to keep the entire 1$ CPM.
And if someone puts any ads on my family birthday videos I'll be irked.
I assume Google can do this cheaper than your S3 calculations. Amazon still needs to make a profit on the hosting so I assume their actual cost of providing the service is much lower. I'm not sure exactly how much lower since I don't know Amazon's margins. Anyone care to take a guess?
Not entirely sure Amazon makes a profit on S3. They might be offering it at a price lower than cost too, to establish themselves trusting costs to go down.
However bandwidth and computers and disks (storage) keep dropping every year. So if they are breaking even now, in 12 months they will be making 10-20% .
http://www.techcrunch.com/2006/04/30/did-youtube-just-raise-... 35M daily videos watched = 1000M monthly videos watched monthly infrastructure cost was estimated to be 1M USD
Which means at 1$ CPM you are barely breaking even. And that is without any revenue sharing costs.
Perhaps Google had better economy of scale but I doubt its an order of magnitude better.