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Cable Technology Feature Article

September 16, 2011

Google 'Throwing Around Huge Money' to Remake YouTube

By Tracey E. Schelmetic, TMCnet Contributor

While there's been a lot of casual speculation in the tech news lately that Google (News - Alert) is eager to put itself into the streaming video subscription market – to compete with Netflix and its ilk – opinion has differed regarding how the search giant should go about it. (Google has been one of several bidders for online television streaming company Hulu.)

What many people forget is that Google already owns the “machine” in the form of video sharing site YouTube (News - Alert). It's just a matter of putting different gas in the tank in the form of more formal and complete content. (To win over those of us who dismiss YouTube as the place where excruciatingly bad amateur videos go to die.) In the spring, Google disclosed that it would plow $100 million into YouTube to ramp up the content – in the form of licensing and partnerships with content providers – and refine the format.

Business Insider is reporting today that two industry sources confirm that Google is actually spending much more than that acquiring content for YouTube – perhaps as much as $500 million or more.

“They are throwing around huge money,” said one of these sources, an executive who has found himself bidding against Google for video content.

Good for Google, it has a lot of money to throw around. The sources told Business Insider that Google isn't just purchasing content: it's actually helping make some of the content.

“They're fronting production costs to the tune of tens of millions of dollars per deal,” said the source.

At the same time, Google hasn't shown any sign of backing off a potential Hulu (News - Alert) purchase, which is apparently spooking the cable and other entertainment companies, particularly since the search giant recently purchased equipment maker Motorola (News - Alert) Mobility.

Said one of Business Insider's sources, “You can imagine if Google were to buy Hulu and they were commissioning all this content and they were willing to take losses for a few years, that would become a real alternative to cable.”

Which may scare the cable companies, but it would give consumers something to cheer about.

Tracey Schelmetic is a contributing editor for TMCnet. To read more of Tracey's articles, please visit her columnist page.

Edited by Jennifer Russell