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YouTube and Google?

Techcrunch just covered the possibility that Google is looking to buy YouTube for $1.6 billion.

I think this acquisition makes a lot of sense. While it was pointed out that Google would be unafraid of the copyright issues, I think another reason why the acquisition is a safe bet is that Google can support the infrastructure and bandwidth costs. Owning YouTube would not be a significant strain on a company’s hardware resources. Seeing as Google seems to have a genuine interest in the video market, signified by the presence of Google Video — which was NOT a free-time-project-gone-gold — I’d say this acquisition has a lot of potential to be true.

If the future of the web is in streaming media, owning the current #1 player would be the smartest way for Google to maintain their edge. What’s surprising is how little speculation there was of this acquisition until this post. It seems like a completely random shot in the dark.

I will say that the acquisition doesn’t sit right with me 100%. Google is not a content provider, and owning YouTube and investing $1.6 billion dollars pretty much guarantees they MUST focus on being a content provider as well as an ad broker. Perhaps they’re starting to realize that in order to keep Microsoft off their toes they need to own some of the content as well? Of course, then they’d be competing with AOL, Yahoo!, and MSN for content, but having YouTube certainly would help in that race.

Of course, this all assumes the rumor has any substance.

2 replies on “YouTube and Google?”

[…] Since everyone else is sharing their thoughts on the Google-YouTube issue, thought I might as well too (even though I’m a little late to the conversation). The Wall Street Journal article added to the credibility of the possibility. $1.6 Billion dollars is a lot of money to pay for a company so susceptible to lawsuits. However, youtube does have a lot of traffic and a great brand name that many people know. Obviously, I’m sure Google is also thinking in terms of keeping it away from Microsoft or Yahoo! in addition to the audience that youtube draws (100 million videos streamed per day). So- is this a good business move for Google? I’m about 60% in favor of the deal from Google’s perspective (100% from Youtube’s perspective). Why not higher? Personally, I think the lawsuits are going to start to pile up VERY quickly if this acquisition occurs. Google has a market value of over $120 billion and about $10 billion in cash on hand, which is sure to bring the copyright lawyers in a hurry. We’ll se how this plays out…it’ll be interesting either way. […]

[…] I didn’t touch on this point on my last post too much, but $1.6 billion is a steal for YouTube. First, imagine if MSN were to lock in a deal with Youtube for advertising. Not only would that help one of Google’s most feared rivals, but the opportunity costs are through the roof. Seeing as YouTube has an immense amount of traffic, an exclusive advertising deal could easily cost upwards of half a billion dollars. And that’s what a company would PAY just to show ads — the actual revenue generated is far greater. Additionally, if the next big medium for advertising on the web is through video, having a 60% market cap on net videos (Google has 10% now) would be a huge advantage. […]

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