YouTube's US$1.65-B Payday
The BIG news to hit the tech world this week is the impending sale of YouTube (www.youtube.com) to Google for a whopping US$1.65 billion. That's a lot of money for a 65-person company that has yet to realize any profit. The main attraction though is the over 20 million monthly hits that the site has been able to generate in less than 12 months.
Founded by youngsters Chad Hurley and Steve Chen in 2005, YouTube is a video clip broadcasting site that allows users to share, view and upload their own video clips. Video clips are then classified and databased for easy access and viewing by site members in the future. The site is particularly popular with amateur music video and short films, becoming a venue for aspiring artists to show off their skills for free and for the entertainment industry to look for good talents.
Lately, TV production companies have also used the site to soft launch TV series aimed at the younger audience. Perhaps, the most eagerly awaited revenue maker of the site would be the ability of the site to show more moving ads, the likes that are similarly shown on TV. This would effectively transform YouTube into a strong ad revenue earner similar to TV stations without the costs involved in running a TV station, plus the fact that the Internet is a more targeted medium compared to TV.
Many analyst are speculating that this seems to be the Internet bubble years all over again. MySpace was bought by Fox for US$600 million, Sony bought video sharing site Grouper for US$25 million, and Viacom bought another video sharing site iFilm for US$250 million. Yahoo is reportedly eyeing to buy FaceBook, a social networking site aimed at high school students and alumni. The question now is whether or not Google is overpaying for YouTube. Perhaps, the best way to show that Google made a good buy in the long run is to integrate the video sharing capability of YouTube into Google's tested ability to sell ad-revenues. YouTube would also be able to ride on the current hosting infrastructure investments of Google.
But, why would Google or any company for that matter spend so much money to acquire an unprofitable site that a company like Google can technically develop on their own? Building a social networking site (SNS), for example, is not exactly rocket science. Our company built one for a Japanese client back in 2004, when SNS was not even a buzzword in the American IT industry. Two of the key buys here are the user-base and, more importantly the BRAND. Google is paying a hefty premium for the YouTube brand's being synonymous to video sharing. In fact, Google does have its own video sharing facility site, but the business people in Google may have thought that YouTube's lead in the video sharing market is insurmountable.
This brings me then to my argument all along - that to be successful in the IT industry requires more than just technical prowess. IT, like any other industry, is a business concern. All business rules apply - brand name, marketing plans, bedgets, financials, and organization strength. And this is perhaps where the challenge within out local IT industry is most pressing - developing companies with a good mix of technology and business expertise, developing businesspeople with interest and exposure to technology, and, developing technology people who are willing to tackle and address the demands of business.
appliedtech of Robert Cheng
Cebu Daily News
12-October-2006
Founded by youngsters Chad Hurley and Steve Chen in 2005, YouTube is a video clip broadcasting site that allows users to share, view and upload their own video clips. Video clips are then classified and databased for easy access and viewing by site members in the future. The site is particularly popular with amateur music video and short films, becoming a venue for aspiring artists to show off their skills for free and for the entertainment industry to look for good talents.
Lately, TV production companies have also used the site to soft launch TV series aimed at the younger audience. Perhaps, the most eagerly awaited revenue maker of the site would be the ability of the site to show more moving ads, the likes that are similarly shown on TV. This would effectively transform YouTube into a strong ad revenue earner similar to TV stations without the costs involved in running a TV station, plus the fact that the Internet is a more targeted medium compared to TV.
Many analyst are speculating that this seems to be the Internet bubble years all over again. MySpace was bought by Fox for US$600 million, Sony bought video sharing site Grouper for US$25 million, and Viacom bought another video sharing site iFilm for US$250 million. Yahoo is reportedly eyeing to buy FaceBook, a social networking site aimed at high school students and alumni. The question now is whether or not Google is overpaying for YouTube. Perhaps, the best way to show that Google made a good buy in the long run is to integrate the video sharing capability of YouTube into Google's tested ability to sell ad-revenues. YouTube would also be able to ride on the current hosting infrastructure investments of Google.
But, why would Google or any company for that matter spend so much money to acquire an unprofitable site that a company like Google can technically develop on their own? Building a social networking site (SNS), for example, is not exactly rocket science. Our company built one for a Japanese client back in 2004, when SNS was not even a buzzword in the American IT industry. Two of the key buys here are the user-base and, more importantly the BRAND. Google is paying a hefty premium for the YouTube brand's being synonymous to video sharing. In fact, Google does have its own video sharing facility site, but the business people in Google may have thought that YouTube's lead in the video sharing market is insurmountable.
This brings me then to my argument all along - that to be successful in the IT industry requires more than just technical prowess. IT, like any other industry, is a business concern. All business rules apply - brand name, marketing plans, bedgets, financials, and organization strength. And this is perhaps where the challenge within out local IT industry is most pressing - developing companies with a good mix of technology and business expertise, developing businesspeople with interest and exposure to technology, and, developing technology people who are willing to tackle and address the demands of business.
appliedtech of Robert Cheng
Cebu Daily News
12-October-2006
posted by Cornelius at 5:26 PM
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