Google – Youtube. A good deal?





There is rampant speculation that Google is close to buying Youtube.¬ Let’s take a look at whether this is a good deal from 3 respects:¬ Google, Youtube, and users.

Google

1.¬ This acquisition will instantly make Google the #1 player in online video, currently the hot trend on the internet. ¬ Outside of search, Google really doesn’t have any product that it can claim to be #1 in its category.¬ Getting Youtube will change this.

2.¬ Some¬ say buying Youtube means Google admits that its own video product could not deliver.¬ This is true.¬ But if the end goal is to be #1 in video, wouldn’t it be a lot easier¬ to just buy the #1¬ player instead of trying to catch up from a trailing position?

3.¬ Google¬ will instantly gain a valuable distribution channel for its video ads.

Youtube

1. As Google is very good in monetizing, Google is bound to find a good way to monetize all that traffic to Youtube.

2.¬ The possible litigation concerns related to¬ intellectual property / copyright issues¬ all of a sudden do not look that serious, as Google has had a lot of experience in this type of issues in some of its products, such as image search and book search.

Users

1.¬ Users can expect to see ads embedded in Youtube videos soon after the deal happens.¬ I expect we’ll likely to see one of two formats: a) a small amount of real estate (say the right-hand side or the bottom) will be used to show ads continuously when the video is playing; b) something similar¬ to what we see in soccer games — have logos of sponsors appearing on a corner of the video.¬ If¬ users want to view¬ the ad, they can click on the logo¬ to do so.

2.¬ As Google is¬ known for innovation,¬ users can continue¬ to see new features coming out for Youtube.

Summary

It looks like this deal will be beneficial for all parties directly involved.¬ Of course, this is all under the¬ assumption that the price Google pays is reasonable.¬ ¬ The rumored price of $1.65 billion definitely falls within the “reasonable” range, both¬ because Google now has¬ lots of cash available, and because Youtube is arguably the #1 acquisition target¬ on the internet.¬

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