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Internet Video Comes of Age: Google Buys YouTube for $1.6BN

Move Makes Google No.3 Most Viewed Video-Sharing Site on the Web
By Web 2.0 News Desk
Article Rating:
October 10, 2006 06:15 AM EDT
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 13,357
Internet Video Comes of Age. After Saturday's reports that Google may be about to quadruple its video-watching audience and move itself to third place, behind MySpace and No. 2 Yahoo!, in the Web video wars by buying YouTube, it's now confirmed: Google Inc. has agreed to acquire YouTube for $1.65BN in a stock-for-stock transaction. Following the acquisition, YouTube will operate independently.

Mike Arrington's TechCruch was the first to break the story that talks between the two companies were in progress -- talks that, since the TechCruch report, the Wall Street Journal reported at the weekend "are at a sensitive stage and could fall apart."

Marketwatch's Ben Charny wrote that Google "has good strategic reasons for acquiring YouTube" having "foundered in many other markets, including supplying online videos." Google Video "has failed to capture a big audience, and it currently ranks eighth in terms of monthly visitors and unique users," he adds, describing the service Google first launched in January 2005.

According to eMarketer Inc., the advertising spend on video-sharing Meccas like YouTube and Google Video will jump from $350M today to something more like $2.5BN by 2010.

Published October 10, 2006 – Reads 13,357
Copyright © 2006 SYS-CON Media, Inc. — All Rights Reserved.
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Most Recent Comments
NMK/Beers & Innovation 10/10/06 06:55:39 AM EDT

overnight this breaking story on Google’s aquisition of YouTube first dropped into my PaidContent. So perhaps the days of the YouTube copy are numbered. View link: http://www.youtube.com/watch?v=76UDVB-ofpI

BTW, does this run counter to the theory that Google is the ultimate aggregator?
View link: http://www.nmk.co.uk/event/2006/10/17/beers-innovation-aggregators
Joao Beltrao 10/10/06 04:20:33 AM EDT

The deal is regarded as a largely defensive one that leapfrogs Google into a leading role in a burgeoning Internet marketplace
brenda 10/10/06 04:18:49 AM EDT

next up-searchincolor, craigslist

the ones who do acquisitions at good prices will win the internet war...for the time being anyway...before another hot idea comes along...
brenda 10/10/06 04:18:49 AM EDT

next up-searchincolor, craigslist

the ones who do acquisitions at good prices will win the internet war...for the time being anyway...before another hot idea comes along...
susanmontez12 10/10/06 04:12:52 AM EDT

At least they paid for it all in stock. Now watch Google's stock price go to $500 like it's 1999.
Ed Burnette 10/10/06 04:11:55 AM EDT

Risks to this venture are numerous, especially now that the company can actually afford to pay for all those copyright lawsuits.

Chad and Steve: if you're reading this, consider the example of Netscape and AOL. Cash out some of that funny money while you can!
Zef Hemel 10/10/06 04:09:21 AM EDT

Some sources say YouTube has a bandwidth bill of $1 million a day, which sounds crazy to me, other sources say it's a couple of million a month. Still quite a big number. In that sense Google is a good buyer, they have plenty of infrastructure and are used to these amounts of traffic.
lunchfeces4u 10/07/06 07:43:03 AM EDT

YouTube was going broke!!! They raised $14M and are spending $1M per month on bandwidth with zero revenue, another month or two and the whole company would have shut down without a rescue deal!!!

Google is simply wasting their $1.6BN on this next to worthless project!!!
equitydetective 10/07/06 07:39:03 AM EDT

CFO Reyes believes in the YouTube deal so much he sold 3.7M dollars worth of stock in the last 2 days! Here's the link: http://www.form4oracle.com/company?cik=0001288776&ticker=goog
ramesh_g 10/07/06 07:36:34 AM EDT

Is Google going to go down the tube with the purchase of YouTube? Just for fun and food for thought.

I hope it can bring more ad revenues. Looks like Google is buying anyone who can boast of millions of internet users.

They may be forgetting that these users are the same users who use one of the search engines. This might affect the search/ad revenue for other search engine providers.