Google acquires YouTube

The Google and YouTube acquisition has been rumored for a few days.  Within the last week the story has developed, which will probably culminate tomorrow as tonight, the acquisition of YouTube by Google will be announced. YouTube’s 65 employees will remain with the company at YouTube’s San Bruno headquarters.

Meanwhile this morning YouTube has announced deals with CBS, Universal Music Group, and Sony BMG.

YouTube launched back in December of 2005.  It's site lets users upload and share any video content they choose, ranging from home movies, funny clips, and some controversial material to spoofs.  Some of the videos that are uploaded are copyrighted material from television shows and movies.  This has caused wide spread concern that YouTube could face a wide range of lawsuits.

Google already has Google Video, but it has failed to bring a lot of visitor attraction.  The Google YouTube deal has instantly catapulted Google as the leader in online video, which is quickly becoming an area of much interest for advertisers. 

The current form of watching movies via a non interactive television set is becoming extremely outdated in comparison to Internet technology.  A single web page can receive millions of viewers a day, and have specific advertisements tailored to the web site.  The same is true with online video.  A YouTube viewer associates tags and descriptions with each of their videos.  Advertisers will be able to buy space on videos that are playing specific videos to their product or service they are promoting.  It's a win win for everyone.  The deal from this perspective makes perfect sense as YouTube, although valued as high as 3.5 Billions Dollars by some estimates, has failed to make any significant profits.  Google on the other hand, has a grand slam in its AdSense technology.  Merging these two technologies together will be a huge grand slam for Google, and YouTube.

The cost of the deal?  About 1.6 Billion Dollars.  Yahoo was in the running until the very end, however fell short at the end.  Will GoogleTube become the online video mogul of the future?  only time will tell.  The deal has been approved by all corporate approval, and will be finalized fourth quarter.

"This is the next step in the evelution of the internet!" - Chad Hurley

Google is hosting a web confrence, which can be viewed live, or replayed later: http://investor.google.com/webcast.html.  If you miss it live, a replay of the call will be available until midnight Monday, October 16 at 888-203-1112 domestically and 719-457-0820 internationally. Confirmation code for the replay is 2260624.