Search icon Google is acquiring video sharing giant YouTube in a deal worth a staggering US$1.6 billion. The stock for stock deal is one of the most significant acquisitions by Google in recent times and shows the value of video in its strategic vision.
Is YouTube worth US$1.6 billion? Google execs obviously see the growing importance of video and the fact YouTube has over 100 million videos watched daily, as justification for the outlay.
The deal has been viewed as more of an alliance than a takeover with YouTube expected to continue operating as its own entity.
“The YouTube team has built an exciting and powerful media platform that complements Google’s mission to organize the world’s information and make it universally accessible and useful,” said Google chief executive Eric Schmidt.
“Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers.”
Considering Google Video’s relatively poor performance, many are speculating its future. Google has committed to its continuance in light of recent deals with the likes of Sony BMG Music Entertainment and Warner Music Group. YouTube is seen as a bonus rather than a replacement by Google execs – quite a significant bonus at that!
The two companies are still brainstorming how to capitalize on their relative strengths to make user experiences better, sell more advertising and help content providers monetize their efforts.
Watch this space closely to see how these two internet giants turn the most expensive user generated acquisition to date into a profitable partnership!