«
»

Google Overpaid For Youtube By A Billion Bucks

When Google paid a brain-numbing and wallet-busting $1.65 Billion back in 2006, a lot of observers questioned the amount paid and why Youtube was worth such a premium. We are now getting some answers.

youtubewidescreen 2 Google Overpaid For Youtube By A Billion BucksDont forget that Youtube was an 18 month old website and made little revenue, the deal handed Google full control but led to criticism from skeptics saying that Google had overpaid and would never see a return on its investment.

Google have now revealed why it paid $1.65 billion for the video site when Googles own directors had estimated YouTube’s worth to be $600-$700 million.

And the reason for the massive overpayment? Google believed they had to offer that much or Microsoft or Yahoo would buy up the increasingly popular video site.

Google CEO Eric Schmidt said:- “This is a company with very little revenue,” Schmidt said while being questioned by Stuart Jay Baskin, a Viacom attorney. “(YouTube was) growing quickly with user adoption, growing much faster than Google Video, which was the product that Google had. And they had indicated to us that they would be sold, and we believed that there would be a competing offer–because of who Google was–paying much more than they were worth…We ultimately concluded that $1.65 billion included a premium for moving quickly and making sure that we could participate in the user success in YouTube.”

So in effect they offered the crown jewels because they thought someone else might buy if they didnt! Its an interesting way to do business, and lose a bucketful of cash.

Incoming TV searches:

google overpaid youtube

Related posts:

  1. Youtube Streaming One Billion Videos Per Day
  2. Youtube Gets The Google Makeover
  3. Youtube is the Daddy with 5.9 billion video views in January
  4. Watch out Youtube, your top Video Site but Hulu’s coming to get you
  5. Youtube second most popular search engine

This entry was posted on Monday, October 19th, 2009 at 4:55 am and is filed under Internet TV news, Internet TV Websites. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Line Break

Author: Matt (668 Articles) - See All Posts By

Crazy Matt Cazzy into all things hi-tech, gizmos and gadgets. If its just out, i want it. Loves watching tv on every device ever invented that can handle it

6 Responses to “Google Overpaid For Youtube By A Billion Bucks”

  1. investing a million bucks more for a mine of gold is not a loss anyways.the growth of you tube is so good that google’s recovery is made easy..

  2. [...] thing is for sure, when people’s mouths hung open at the pice Google paid for Youtube (which was admittedly $1 billion too much), they should have realised that there was a reason for this. If the convergance happens as Google [...]

  3. [...] innovation on a regular basis, usually designed to make it into a more profitable entity after the massive buyout by Google. The latest innovation though, seems to be designed more for the user than advertiser. [...]

  4. [...] for buying the company is their network of independent filmmakers. Google have, since they purchased Youtube for $1.65 billion in 2006 been looking to both improve the content and revenue of the video site. They have already [...]

  5. [...] YouTube’s place in the market. The Google Video service began in 2005, the year before Google bought YouTube for a bank busting $1.65 billion. Google said: ”We would instead focus its efforts on video search [...]

  6. [...] Skype, after making the purchase for an eye watering $8.5 billion. That figure makes the $1.65 billion Google paid for Youtube, seem like [...]

Leave a Reply