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.
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.Â
Tags: none
[…] Google announced its acquisition of Youtube after the market closed today in a stock purchase valued at $1.65 billion. I’ve outlined why I thought this is a good purchase for all parties involved in the previous post. […]