Why YouTube Is Google's Largest Asset

When three former PayPal employees first launched YouTube back in 2005, the conceptual idea of a mainstream video storage and streaming service was far-fetched at best.  Sure the Internet was growing at the time and the site (if successful) had unspeakable potential, but when it boiled down to it Chad Hurley, Steve Chen, and Jawed Karim were entertaining a venture that had yet to prove itself as profitable or worth their interest.  However, any and all doubts as to YouTube’s potential were cleared in 2006 when Internet giant Google purchased the once unknown video site for a mere $1.65 billion USD.  Quite a chunk of change for a site that had been conceived just years before, isn’t it?

In 2011, YouTube has become a household name.  The media site has become an online destination for entertainment and information alike, and the site has content appealing to just about every end-user.  But there’s something about YouTube that seems to set it apart from every other Google acquisition.  You see, unlike  sites like Orkut that Google has picked up as subsidiaries, YouTube is constantly being developed and refined, and it is obvious that Google treats the site as a key component in its overall business scheme.  Having said this, I honestly feel that YouTube is easily Google’s most important asset; not necessarily in terms of present-day growth and revenue, but more in terms of the potential for great success and profit down the road.

Keeping in mind Google’s success with Gmail, Google Chrome, Android, and of course the company’s foundations as an Internet search engine, I can understand why you might be raising your eyebrow right about now.  But, even though Google is actively involved with a number of other ventures and services, none of them have the room for growth that I see in YouTube.  After all, how much more are the email or search markets going to expand in the future?   Sure, the potential for growth is there, but with the news I’ve been reading about YouTube in the past couple of days I’ve come to the conclusion that YouTube is Google’s anchor into the social media enterprise, communications business, entertainment industry, and ultimately the everyday lives of millions of people.

With Google struggling to get their own social network off the ground, I have honestly been under the impression that Google’s social venture would be more of an extension to Gmail and Google Talk than anything else.  After all, these are Google’s key communications tools, so it would only make sense that Google would opt to expand upon its existing success when building their social network.  However, the more that I ponder this situation the more I convince myself that in order for Google to have any chance at success with any social website they are going to have to do something different in order to set themselves apart from the somewhat repetitive social networks out there today.

But how can they be different?  After a while, friends lists, “walls”, status updates and profiles become extremely boring.  Having said this, Google’s potential to be successful with a social venture pivots entirely on their ability to implement more “modern” communications mechanisms.  What comes to mind?  Video.

And really, it makes great sense.  YouTube is, as it stands, Google’s largest “social” site.  Not only does it implement videos, but users are free to interact, befriend, and mingle with one another.  Sounds pretty social, doesn’t it?  So wouldn’t it make more sense for Google to build upon the social features of YouTube with their own social site?

Perhaps more importantly, though, YouTube has become a destination site for people looking for entertainment.  With millions of videos, this only makes sense.  But one of the things that has always steered me away from YouTube has been the fact that the content gets “stale” relatively easily.  It is, after all, produced mostly by amateurs and is rarely developed or planned well enough to replace traditional entertainment.

This could easily be changing in the near future, though.  You see, Google recently began the process of leasing a building in  Hollywood, California which, sources tell the LA Times, will be used for YouTube employees.  Don’t be fooled, though.  YouTube isn’t expanding into southern California because of the weather (California weather is overrated, anyway) or to get a first-row seat for the latest celebrity gossip.  They’re quite obviously going there in order to get more hands on with the film and entertainment industry.

Seeing as how Netflix recently acquired rights to their first original series, it really doesn’t seem far-fetched at all to believe that Google would be in the midst of launching their own original content, especially seeing as how Google recently began making acquisitions that would make YouTube’s potential for producing in-house content that much greater.  Combine this with the planned revamp of the video streaming site to include more “channel” based content and it is pretty obvious that Google wants to get their toes wet with the entertainment industry.

So, even though YouTube might not be Google’s main attraction as of yet, I am confident that as time passes we will see Google playing favorites with the once unknown video site.  And really, I can’t blame them.  With broadband technology bettering with every passing day and the potential for web-based television lingering, Google would be missing out on a ton of potential if they weren’t to pursue YouTube as a modern-day media empire.