In the year 2006, Google made one of the biggest tech deals ever to exist till date when it decided to purchase a video hub start-up aged only for a year and a half, YouTube for an astounding price tag of $1.65 billion.
When the internet was in desperate need of a video hub, YouTube came into existence. Despite Google’s failed to attempts to create its own video hub which failed miserably when competing with YouTube. YouTube had become an instant success as it offered pirated T.V clips and different social features and was one of the fastest growing websites.
Google focuses and cares about displaying and selling ads against search results. In today’s day and age, YouTube has grown to become the world’s largest video search engine with near infinite storage of various video clips, all guided by Google’s intelligent algorithms. It is a part of Google’s innovative and hidden strategy to guide consumer search queries to other different Google services.
Since the purchase of YouTube in 2006, Google has only gone up and expanded it by introducing ad revenue. The revenue of ads is split between the company and the video creator. Such a formulation has demanded the necessity of higher quality content. No money spent has been a loss since YouTube is adapting and innovating itself. The company recently launched new features such as live streaming and VR (virtual reality). While YouTube may be the go-to online video site, it still hasn’t been able to compete or outgrow other entertainment giants such as Netflix in streaming movies and sitcoms.
Many argue that Google’s decision to purchase YouTube isn’t as profitable as expected. Few reasons are facts like YouTube does not publish its financial according to Wall Street, being an online video hub, handling and managing online videos are not cheap which means YouTube expenses are expected to be off the charts, the fact that a significant proportion of ad revenue to video creators and constantly innovating itself. And as of recently Facebook is a compelling competitor.
Google’s stock has skyrocketed immediately post-purchase of YouTube and has ever since been an integral part of the company’s growth initiative. The fact that Google made such an investment decision depicts the company’s interests about the future. Such decisions are bound to attract wealthy investors.
YouTube has been gracious enough to offer the opportunity to stream online videos and songs of desire to the consumer, all for free of cost. It has helped serve as a platform for launching independent businesses as well.