Google-YouTube Harvard Case Solution & Analysis

Introduction

Due to an increase in broadband capabilities; digital media is skyrocketing as a major entertainment platform. Creation of online video platforms such as YouTube and Hulu has fueled the digital media as a platform of entertainment. Two primary explanations behind the prominence of online video platforms is the rising trend of broadband usage and rising demand for online video advertising.

Internet video had been dominated by user-generated content, which consisted mostly of amateur video content, web-cam recordings, and home video clips. Internet video’s popularity indicated a bigger trend for on demand entertainment. Some experts projected that by 2010, revenues of video on demand services would reach as much as $12 billion and internet videos would account for $4 billion of this total amount. It was also forecasted that as the internet would grow as a distribution channel for video on demand content, hence, percentage of revenues coming from internet advertising would also increase.

Background

YouTube offers free video on a global scale but with localized features for important markets. It removed technological barriers to the widespread sharing of videos online and it enabled users to upload and stream videos without any technical knowledge. YouTube has maintained its growth of users well by providing enough infrastructural data transfer capacity to handle the huge volumes of transferring and downloading. Scalability is the core competency of YouTube. YouTube’s business model is advertisement-based through which it makes $15 million per month.

YouTube was launched in February 15, 2005 and gained enormous success by word of mouth. It was positioned as the fifth most popular website in 2006. At that time, figures quoted that 100 million clips were viewed daily and 2700 videos were uploaded every hour. This helped it to pick up lead over its rivals who were still attempting to hold grip of the rising video market.

Google acquired YouTube for $1.65 billion in 2006. This merger gained massive attention across many industries and helped to build up YouTube’s image. It also served to get agreements to place premium content on the site, which gave more funding to YouTube. YouTube became  more popular due to the fact that Google is its parent. Content is added every second by a visitor, which is a huge advantage due to which YouTube has become a well-established video portal.

1.      “Video” opportunity missed by Google discussed in terms of strategy and competitive advantage.

Poor initial design:

Google Video service was launched by Google in January 2005. It outlined its site with features where users are able to search videos. By helping users to search TV shows and discovering where and when to watch television programs, Google seeks to simplify the viewing of television programs. Google let users to find videos in the search history and bookmark it, but it was far more difficult to do it, therefore; this outline did not run well with users.

Lacking openness:

Number of views and links to a video were not shown on the site, so users were unable to have a better perspective about that video; however, number of views was shown only to the uploaders. Furthermore, to upload UGC users had to download the desktop client at first, then install it and at the end submit their videos.

Unsatisfactory Service:

Video service of Google was unsatisfactory as compared to other video sites. While searching, actual video was not shown, instead a list of related videos, new and still images of original video were shown. Google Video disappointed once more as a site that required a video plug-in (VideoLAN) to play videos on the website. Later on, new flash technology was offered by Google, which was quicker for uploading videos but it was slow.

Copyright Issues:

Google tends to remove copyrighted content from its site and sell premium videos. However, YouTube has a lot of free TV shows and music videos without having the legal right, so it pulls in more people. This gives an added advantage to YouTube and other competitive websites.

It came with a cost:

Premium content was offered by Google Video for which payment had to be made through Google checkout. However, YouTube offered services free of chargewhere users were allowed to upload, view and share their videos.

2.      Supply chain dynamics and positioning within the “video” supply chain.

“Video” value chain or Digital supply chain is the methodology of delivering digital media, such as music or video, from the point of origin (content provider) to destination (consumer) by electronic means. Digital media must pass through different stages in the process so that consumers can enjoy music or video on computers or portable media.

Google has made a lot of acquisitions including YouTube to strengthen their positions across the value chain. This resulted in .......................

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