Google Buys Youtube for 1.65 billion

The rumor mill went crazy in the last couple of days about a possible acquisition of the video portal YouTube by Google. The  deal was officially announced by Google and YouTube in a press conference the company held earlier today. Google paid a total of 1.65 billion Dollars in a stock-for-stock transaction to acquire the popular video hosting website.

Information about the deal are scarce. What we do know is that Google will keep the YouTube brand and use it from this moment on as one of its own. YouTube will continue to operate from offices in San Bruno, California, and not a single employee will lose their jobs in the process.Why did Google make the acquisition? The company operates its own portal Google Video which stands in direct competition with YouTube.  The main reason is of course YouTube's larger appeal and that the company's own video site never stood a chance against the rising star of YouTube. So, instead of pumping resources into Google Video, Google decided to buy YouTube instead and use it as the company's own portal.

I would be very surprised if Google Video would not be merged into YouTube in the process, there is obviously no need for two video sites in Google's portfolio.

So, what is most likely to happen in the long run? We heard rumors about Google Video ads and YouTube would be an ideal candidate for this kind of ads. I think that we will see some sort of ads in the long run on YouTube, maybe before the original video is shown just like sites as gamespot.com or gametrailers.com do it for some time.

What is your opinion on this? Is it a good move, a bold move, a stupid one ? Let me know.

Update: Turns out that Google was right. YouTube is the most popular video hosting site on the Internet, and while it still does not seem profitable, it is likely that it will turn over a pretty penny in the long run. As far as ads go, YouTube has started to show ads before some videos, and also ads over videos on the site.