Google To Acquire YouTube
TechCrunch's Michael Arrington rates his own rumor at about 40 percent likely, just so we get that out of the way. The "completely unsubstantiated" rumor is that Google is finalizing talks to acquire web video phenomenon YouTube.
Arrington received the information via email, confirmed the rumor and the price ($1.6 billion) with venture capitalist firm Sand Hill Road. Earlier reports have valued YouTube, which streams about 100 million videos per day, as high as $2 billion, even with its million-dollar-per-month bandwidth fees.
The commentators at TechCrunch are split on the rumor, some calling it "ludicrous," others exploring the possibilities of why it would make sense for Google to acquire YouTube. The first thought, at least from here, is that Google has to do something with all that cash.
But why, why acquire YouTube? Doesn’t Google already have Google Video? Why not build upon Google Video and wait for someone else to fall into the YouTube acquisition trap?
The reasons why do run a many and are difficult to be pinpointed in one simple statement, so here’s a rundown of reasons Google would pay $1.6 Billion for YouTube.
1) Popularity. YouTube is the 10th most popular online destination according to Alexa and if you don’t trust Alexa information, its also ranked as the third most popular steaming video site by comScore Media Metrix and #1 visited online video site according to Hitwise.
Google Video is no where near the top online video site, at this moment, and hovers among MSN and Yahoo among the other online dinosaur fossils according to the Hitwise rankings:
August Hitwise data reflects the following in terms of rankings (based on share of visits):
* YouTube: 45.46%
* MySpace Videos: 22.99%
* Google Video: 10.25%
* Yahoo! Video: 6.06%
* MSN Video: 5.92%
Additionally, in September, YouTube enjoyed a market share of visits 4 times greater than Google Video.
2) Not making the same mistake twice. Google made a $610 million mistake this year by not acquiring MySpace when they had the chance. Instead News Corp’s Fox Interactive bought MySpace for the bargain price of $580 as MySpace’s parent company was looking to sell fast in order to avoid lawsuits (over spamming, not copyrights).
Then, Google turned around and sunk $900 million into a MySpace advertising deal.
3) Community : YouTube enjoys a much more active, enthusiastic and loyal following than any video service which has been launched by a search engine company, even more active in terms of uploading and sharing by netizens than Yahoo Video.
With 35 million users in the United States alone, YouTube has proven that the success of online video is based upon sharing, commenting, ranking, embedding and suggestions… in other words; community.
YouTube users are using the interface to share, upload and comment on videos. Not just watch them. That’s the difference between users and community, and YouTube has community.
4) Usability & Stickiness : This kind of falls into the classification of popularity, but users like YouTube more than they do Google Video. They stick around and watch more content on YouTube, while at Google Video they don’t seem to stick around quite as long.
Hitwise says that “YouTube’s average session time is double that of Google Video’s, at 18 minutes 33 seconds in the month of September versus 9 minutes 9 seconds for Google Video. YouTube is just plain sticky compared to Google Video.”
5) Advertising and Money : Throw community, popularity and stickiness to the side for now and let’s get down to the nitty gritty. Purchasing YouTube at the price of $1.6 Billion would not be a crazy investment for Google.
If YouTube serves 100 million videos a day, that’s 365,000,000,000 a year… or roughly 3.65 cents per video. If anyone can turn a profit off of YouTube, it’s Google and in this case, given the users, popularity and traction a YouTube buyout would give Google, it would make more sense for the company to obtain 100% of YouTube AdWords revenue than 20% or 30% of it.
It's no secret that Google has been moving from search engine company to media company, and controlling a market like the one
YouTube commands would play straight into that strategy. Adding YouTube to Google Video would give Google tremendous video market share, adding to their search dominance.
Especially with the Google Video Ads program in the works by Google AdWords.
Arrington received the information via email, confirmed the rumor and the price ($1.6 billion) with venture capitalist firm Sand Hill Road. Earlier reports have valued YouTube, which streams about 100 million videos per day, as high as $2 billion, even with its million-dollar-per-month bandwidth fees.
The commentators at TechCrunch are split on the rumor, some calling it "ludicrous," others exploring the possibilities of why it would make sense for Google to acquire YouTube. The first thought, at least from here, is that Google has to do something with all that cash.
But why, why acquire YouTube? Doesn’t Google already have Google Video? Why not build upon Google Video and wait for someone else to fall into the YouTube acquisition trap?
The reasons why do run a many and are difficult to be pinpointed in one simple statement, so here’s a rundown of reasons Google would pay $1.6 Billion for YouTube.
1) Popularity. YouTube is the 10th most popular online destination according to Alexa and if you don’t trust Alexa information, its also ranked as the third most popular steaming video site by comScore Media Metrix and #1 visited online video site according to Hitwise.
Google Video is no where near the top online video site, at this moment, and hovers among MSN and Yahoo among the other online dinosaur fossils according to the Hitwise rankings:
August Hitwise data reflects the following in terms of rankings (based on share of visits):
* YouTube: 45.46%
* MySpace Videos: 22.99%
* Google Video: 10.25%
* Yahoo! Video: 6.06%
* MSN Video: 5.92%
Additionally, in September, YouTube enjoyed a market share of visits 4 times greater than Google Video.
2) Not making the same mistake twice. Google made a $610 million mistake this year by not acquiring MySpace when they had the chance. Instead News Corp’s Fox Interactive bought MySpace for the bargain price of $580 as MySpace’s parent company was looking to sell fast in order to avoid lawsuits (over spamming, not copyrights).
Then, Google turned around and sunk $900 million into a MySpace advertising deal.
3) Community : YouTube enjoys a much more active, enthusiastic and loyal following than any video service which has been launched by a search engine company, even more active in terms of uploading and sharing by netizens than Yahoo Video.
With 35 million users in the United States alone, YouTube has proven that the success of online video is based upon sharing, commenting, ranking, embedding and suggestions… in other words; community.
YouTube users are using the interface to share, upload and comment on videos. Not just watch them. That’s the difference between users and community, and YouTube has community.
4) Usability & Stickiness : This kind of falls into the classification of popularity, but users like YouTube more than they do Google Video. They stick around and watch more content on YouTube, while at Google Video they don’t seem to stick around quite as long.
Hitwise says that “YouTube’s average session time is double that of Google Video’s, at 18 minutes 33 seconds in the month of September versus 9 minutes 9 seconds for Google Video. YouTube is just plain sticky compared to Google Video.”
5) Advertising and Money : Throw community, popularity and stickiness to the side for now and let’s get down to the nitty gritty. Purchasing YouTube at the price of $1.6 Billion would not be a crazy investment for Google.
If YouTube serves 100 million videos a day, that’s 365,000,000,000 a year… or roughly 3.65 cents per video. If anyone can turn a profit off of YouTube, it’s Google and in this case, given the users, popularity and traction a YouTube buyout would give Google, it would make more sense for the company to obtain 100% of YouTube AdWords revenue than 20% or 30% of it.
It's no secret that Google has been moving from search engine company to media company, and controlling a market like the one
YouTube commands would play straight into that strategy. Adding YouTube to Google Video would give Google tremendous video market share, adding to their search dominance.
Especially with the Google Video Ads program in the works by Google AdWords.
posted by Theghostmit at 5:43 AM
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