Tuesday, October 10, 2006

Will Google regret buying YouTube?

Yes, the inevitable has occurred, YouTube has been bought by Google. No one ever really wanted YouTube to die of capital starvation, which at the reported cost of its bandwidth expenses alone amounted to a few months of survival. And with no concrete signs of immediate monetization besides Google Adsense, YouTube was definitely on its way to be listed as one of the first casualties of the "new Web economy". Fortunately, Google saw a future in You Tube that merited a $1.65 billion deal, an amount that is the largest in Google's acquisitions. Now, back to the question, will Google regret buying YouTube? Here are my points:

  1. Google had a chance (or not?) to capture the same market with their Google Videos, but the traction probably was slow enough that they decided to just buy the brand of "YouTube". The community behind YouTube was the X factor, that part of the equation that other video sites could not or are trying to equal. And so they were actually buying the brand and the loyal community behind it.
  2. $1.65 billion dollars. Wow. That's a big investment for a company that is all potential and has no track record for earning. Long term investment? Probably not a good one if the progression of the Web is to be followed....if YouTube does succeed in monetizing, it has to innovate and reinvent itself to be able to get back even a small amount of the current buyout price.
  3. Will Google turn YouTube into a paid video download site, where you can still view sneak peeks of movies and purchase those that you like. Those videos that users upload will for surely remain as a staple feature for the community, and remember, YouTube technically owns anything that you upload. A small price for free hosting.
  4. The monthly expenses for YouTube's bandwidth is not a small thing, remember Yahoo's acquisition of Flickr? Well, they are definitely not monetizing through it, and need to shell out the money for keeping Flickr afloat.

Well, Google may have a plan up its sleeves, I just hope that their magic rubs off on their new acquisition, YouTube.