The news signifies an even deeper commitment by Google, the search giant, to provide video content that rivals what the most sophisticated cable and over-the-air broadcast networks offer.
The company is also pushing into new types of video-recommendation techniques that will not only suggest directly related videos to users but also use sophisticated algorithms to ascertain what a user will like based on previous viewing history and other indirect factors. This could turn YouTube into a video-discovery engine, similar to Internet radio company Pandora.com.
That could prove to be a far more lucrative format. Recommendation engines, when properly done, can significantly increase user engagement and can make ad spots more valuable on recommended streams. Pandora, for example, has managed to secure premium advertising rates for online spots running on its network during the seven times per hour that its listeners click back onto the Pandora.com site in order to rate a song, switch to a different channel or create a new channel.
It's also a model that is uniquely suited to YouTube. The largest online video property has an enormous inventory that covers the full range of content, from crude user-generated home videos to slick documentaries and online TV series. That supply makes a wide array of recommendations possible, something that stand-alone broadcast channels couldn't as readily provide.
Wall Street analysts view Google's YouTube unit as a rising star. They anticipate that the online video ad market is set to explode. Google, although it paid a rich $1.65 billion for YouTube, could still end up as a big winner in the race to monetize the medium and lock up viewership.
But it has plenty of company in that regard. Hulu.com, the streaming video-programming startup launched by a coalition of large broadcast networks including NBC and ABC, has quickly become a major force, racing to grab the second position behind YouTube in terms of total views. Hulu makes it easy for users to track and queue up available online streams of their favorite TV shows. With YouTube's latest moves, battle over online video just got hotter.
Alex Salkever is Senior Writer at AOL Daily Finance covering technology and greentech. Follow him on twitter @alexsalkever, read his articles, or email him at alex@dailyfinance.com.
