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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