Google Buys YouTube for 1.65 Billion

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Tuesday, October 10, 2006

Google Buys YouTube for 1.65 BillionGoogle acquired the online video phenomenon, YouTube, for $1.65 Billion. YouTube was founded in February of 2005 by 3 former PayPal employees. The company has since grown to over 60 employees, and has vastly become a very popular video sharing website which lets it's users upload, view, and share video clips. YouTube hosts a wide variety of video content.

Google Buys YouTube for 1.65 Billion

Last night, Google acquired the online video phenomenon, YouTube, for $1.65 Billion. YouTube was founded in February of 2005 by 3 former PayPal employees. The company has since grown to over 60 employees, and has vastly become a very popular video sharing website which lets it's users upload, view, and share video clips. Utilizing Adobe Flash technology to display video, YouTube hosts a wide variety of site content including movie and TV clips and music videos, as well as amateur content such as video-blogging and personal home videos.

My Thoughts

I've been trying to wrap my head around this acquisition since it was first rumored, and I keep coming back to the price. 1.65 Billion is an insane amount of money when buying a video sharing website. I just don't understand where the value is and how YouTube fits into Google's core services. Obviously, I am missing something, that much is clear. Here are some thoughts:

  • Google, in attempt to become a major player in online video, probably felt that their current Google Video platform, released earlier this year, is not at all comparable to those of its immediate competition. Therefore, their only hope for becoming a true leader in the online video market was to buy one that is.

  • Google really wants to be in control of YouTube's 1 million plus users, and solicit future users to sign-up via a Google account... similar to what Yahoo! has done with Flickr. Having more Google accounts under the company's belt will allow them more ways to solicit future products, not to mention track more individual user-behavior... no, Google wouldn't do that... would they?

  • Anyone who is a frequent visitor of YouTube knows that Google is serving up advertisements on what seems like every page of the video giant's website. It is through this partnership that Google gets to monitor just how much web-traffic YouTube receives. I wouldn't be surprised if Google realized just how much money it stands to make now owning 100% of the money coming in through that ad distribution deal, rather than just the 20% or so it owned before.

In any event, regardless of how this transaction will eventually play out, it sure was ground-breaking.

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