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Google in Heaven say Analysts

2006-10-10 admin

As most of you are probably aware last night Google confirmed its all share $1.65b acquisition of YouTube. As Richard Holway, Director of Ovum said yesterday "This is a 'marriage made in heaven'. It really makes Google the powerhouse to beat right now."

Today, John Delaney, Principal Analyst, comments further.


"We hear a lot these days about the 'long tail' - the idea that the one-to-one nature of the internet as a content medium will lead to a much wider range of content being consumed, created by both professionals and by consumers themselves" Delaney says.

"Like most new ideas, the 'long tail' is being over-hyped. So personally, I'm grateful to Scott Watson, an executive at Walt Disney Imagineering, for introducing me to the concept of the 'short dog'. Put simply, the 'short dog' is the small number of big hits that dominate the movies, songs and other types of content which are consumed".

There's a lot of focus on how YouTube is 'democratising' production and consumption of video, and clearly that has been an important factor in its success to date, says the analyst.

"But we also need to consider its importance as a business phenomenon going forward. YouTube is primarily important not because it creates a new paradigm in video entertainment, but because it is a people magnet. It attracts a very large number of people to a single place on the internet. Once those people are there, content producers can sell them their content, and advertisers can expose them to their advertising.

Content blogging and social networking sites are becoming important sources of advertising inventory. What is most interesting, then, about Google's acquisition of YouTube is that it is the second major takeover of the new advertising media by the established advertising media - the first being News Corp's acquisition of MySpace. Rumour has it that a third one will not be far behind, with Yahoo making eyes at FaceBook.

And all this is happening without a whimper from either the competition authorities or the advertising industry. To paraphrase Bob Dylan: 'something is happening and they don't know what it is, do they Mr Jones?' "


www.ovum.com




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