Google doesn’t break out YouTube financials, but according to a Wall Street Journal source, the video site was “ roughly break-even” in 2014. No … which works heavily against my argument, but hear me out. A live-TV service rumored to be launching in 2017 could do the trick.
YouTube has the infrastructure and the eyeballs - it just needs the kind of content the TV industry respects and understands. AMERICA.” Think Twitter scooping up streaming rights for NFL games. To shake the stigma, the site will probably have to buy up a name-brand media property that screams “TELEVISION. But it’s still viewed as television’s kid brother among its advertisers, and as a launching pad toward bigger and better things by its creators. YouTube has tried investing in television-like original content, charging for channel subscriptions á la carte, and launching a Netflix-esque monthly subscription service with exclusives shows and movies. And YouTube has aggressively reinvested its money into the formats of the future, such as livestreaming and virtual reality.īut while YouTube is the reigning king of online video, it hasn’t yet lived up to the cable-killer hype pundits have been ascribing to it for years. That content has been extremely popular among kids and young adults, whose clicks are the precious manna keeping thousands of media/tech/advertising professionals employed. Splitting ad revenue with video creators spurred the creation of higher-quality content. Since then Google has made smart decisions to expand the site’s ambitions. In 2006, YouTube was basically America’s Funniest Online Videos + illegal SNL clips. Was it a smart investment for the future?ĭefinitely. Google loves when search queries drive people to other Google services, and YouTube is a big part of that strategy.
It helps that search results from the main Google search engine are often filled with YouTube clips. Google can sell display and video ads against all these clips, to the tune of more than $5.2 billion in estimated revenue this year, according to eMarketer. YouTube has evolved into the world’s biggest video search engine, with a sprawling database of clips made navigable by Google’s smart algorithms. Google cares about selling ads, and it especially cares about selling ads against search results. Did it improve the company’s core business? As the adage goes: If you can’t beat them, buy them. At the time of its acquisition, YouTube was one of the world’s fastest-growing websites, and its executives had a clear understanding of what users wanted out of a video site. But the site failed to catch on as quickly as YouTube, which had more social features and extremely popular pirated TV clips (try to find a 2006 feature about YouTube that doesn’t mention “Lazy Sunday”). In 2005 the web was in desperate need of a video hub, and Google tried to create one with the poorly named Google Videos (a naming concept the company refuses to reinvent).
Did the acquisition eliminate a direct competitor? It was one of the first wild bets a tech giant made following the dot-com crash, and for the following reasons, I’m willing to defend it as the best one. YouTube was already world famous when Google snapped it up, and its price tag was ridiculous by conventional standards.
The difference is that at that time, no one outside Silicon Valley knew what Android was. But is it the best acquisition of all time? There’s certainly an argument for a couple of tiny investments that paid off incredibly, like Yahoo scooping up Flickr and Google’s $50 million acquisition of Android in 2005. Google itself later acknowledged that YouTube wasn’t worth anywhere near the price tag at the time of the acquisition.Ī decade later, though, the YouTube buy is widely considered to be one of the best consumer tech acquisitions ever. Mark Cuban said the search giant was “ crazy” to take on YouTube’s many legal liabilities. Some analysts and competitors said Google overpaid. That figure seems quaint now (it equates to WhatsApp being worth about 13 YouTubes) but at the time it was an eye-popping figure to pay for a startup only a year and a half old.
Ten years ago this week, Google bought YouTube for $1.65 billion.