It's Official: Google Buys YouTube for $1.65 Billion

It's confirmed: Google to buy YouTube in a stock for stock transaction worth $1.65 billion. Read more in the press release or listen to the webcast. It looks like this could be a win-win for both companies with CEO Eric Schmidt indicating that Google engineers were able to find about 30 ways in which Google technology could enhance YouTube's infrastructure.

Now, the big question is: will the two services be kept separate or be brought together? Most likely, kept separate because YouTube's name recognition is a lot greater than Google Video's, and the audience that YouTube targets is a slightly different demographic from Google's. Hitwise reports

Google Video skews more male and older than YouTube, and a look at the Top 100 videos on Google Video gives you a hint of soft porn, while the most viewed videos on YouTube (despite the ads) seem a bit more childish in nature. Also, YouTube's average session time is double that of Google Video's, at 18 minutes 33 seconds in the month of September versus 9 minutes 9 seconds for Google Video. YouTube is just plain sticky compared to Google Video.

It looks like this deal is the start of the legitimization of online video sites with multiple deals signed with media companies including Sony BMG, Warner Music, and CBS over usage rights and ad revenue sharing.

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