Google to Buy YouTube
I suppose you’ve heard that Google has agreed to buy YouTube, the largest online video watching and sharing site in the world, for $1.65 billion worth of Google stock. Yes, $1.65 BILLION.
For a good review of the reasons why, and some analyst opinions, see eMarketer.
I’m always in awe of Google’s mission statement “to organize the world’s information and make it universally accessible and useful.” (see http://www.google.com.au/profile.html)
Bookmark:
RSS
Comments
And I am really confused with Google’s acquisition here. I don’t think we’ve seen Google do something like this before. Typically we only see Google purchases that get Google into a business. In this case, Google Video was an already existing competing product to YouTube with very similar technologies. Unless I’m missing something, YouTube has very little to offer Google with respect to technology. Video’s on YouTube have questionable ownership rights and so buying YouTube for the videos doesn’t make a lot of sense. YouTube is a fad, and so I think it would be disappointing for Google to dish out over a billion just for a name. What am I missing? What is really worth $1.6 billion that Google couldn’t do on its own?
What Google is buying for $1.6 billion is traffic: 100 million videos per day to over 20 million unique visitors a month. According to Hitwise, YouTube has a 30% share of the US multimedia entertainment market and YouTube videos account for 60% of all videos watched online.
There’s no better way to beat your competitor than to buy them out. Adobe did the same thing with Macromedia.
Still, $1.6 BILLION is a lot to pay for a site that may only be today’s trend. Maybe I just feel that way because my mom wouldn’t let me have the trendy Nike shoes when a pair of the cheap off-brand shoes would keep my feet covered. Or maybe I’m still having bad memories of Time-Warner buying AOL.
I don’t know what sort of revenue Google can get per page impression. If they can make a penny per video view then they might make good on their investment sometime this decade. If they can make closer to a dime per video view, then they made a very good buy.
Leave a comment