After days of rumors, finally Google has agreed to purchase online video phenomenon YouTube for $1.65 billion in all-stock deal in order to make the transaction tax-free for the YouTube shareholders.

Me and my wife last night thinking how cool if we can think and start an idea with this worth, hahaha! Well, I slept last night hoping I can dream one, hehehe.

So what will happen now? And what this deal means to them and of course to us users?

First of all, this deal is a winner for both Google and YouTube in my limited analysis (as I was thinking of this last night, hoping of dreaming something similar, hehehe). Google knows that in the future video is the next big thing after the MP3s, podcasts, and all the audio stuffs. With the bandwidth is now cheap and available to most internet users, online video distribution is now so easy and widely accepted by most of us users.

In fact Google got also similar service - video.google.com – as they tried to compete but 45% of the online video market is own by YouTube according to Hitwise. And whopping more than 100 million videos are available on YouTube on a given day, with 65,000 new videos added every day and 20 million unique visitors a month.

Is YouTube really worth $1.65 billion? I got a tech-friend-with-MBA and said its way expensive and cost a lot to Google just to kill YouTube. He believes that Google will just kill YouTube in favor of their own Google Video. Google will simply kill the competition and let their own product prevails.

Heck, I think the other way around, hehehe. Google use to acquire some cool products like Blogger and Writely and Google really using it.

In the case of YouTube and Google Video, I’m sure Google will use the strong user base and huge collection of existing videos of YouTube and use their own deep pocket and all their existing infrastructures like servers, bandwidth, storage which was the major operation cost of YouTube before the acquisition.

Money wise, one of the YouTube’s current monetization schemes is from Google Adsense itself, and for sure Google definitely knows how much YouTube is earning from it. This gave Google the leverage and confidence that $1.65 billion is recoverable and they can even gain more as they are now taking over the whole video distribution in the internet. They are now free to decide which way Internet Video will go as they own now the whole market.

For us users, it will be less exciting in my opinion as the competition will not be there anymore; its like whenever we want to watch video, we use gTube or GooTube, what ever they will call it. The good news is Google is very good in innovating and advancing their own technologies and I’m still expecting some cool stuff to come. Although, I’m anticipating Google will prioritize first the legal and copyright side of the video contents they have now from YouTube, as I’m seeing YouTube got many free videos which are for sale in Google Video.

Also, expect more paid contents in the future as Google is really now legitimizing the video business in the Internet, I bet most of the media companies and video providers will go with Google’s way how to distribute video contents. I’m sure the business model is already there in Google’s board room whiteboard as this acquisition made Google way way ahead compare to others giants like Microsoft and Yahoo as Internet Company.

And for free videos, expect a more thorough checking before it will show up to the public as Google now will fully check and confide first with the partner media companies and video providers whether the video you are uploading is really your own or copyrighted. This is one compelling reason and a premium advantage if you are a Media Company who partnered and go with Google’s way – you can easily flag videos uploaded if it is your own and must not be allowed for free.

Great job for Google of acquiring YouTube. They are now more powerful as they dominate one more important area of the Internet.

What a fortune and a relief for YouTube as they got what they deserve amount of money and they free themselves to all the operating expenses and possibly legal issues.

A less exciting and sad day for us users as the competition is now gone and the future of Internet Video is now completely in the hand of Google.

I'm hoping to see a new YouTube clone to bring back the fun to us.