10 Billion Ways to Say ' I Told You So'

Americans watched 10 billion videos online in March, for a whopping 66 percent year-over-year increase. Google's video share was 35 percent, or about twice as much as the other top 10 providers combined.

According to ComScore:

• About 73 percent of American Internet users watched at least one online video in March.
• More than 80 million users watched 3.42 billion videos on YouTube.com, or nearly 43 videos per viewer.
• The average viewer watched 75 videos at all sites in March.
• Viewers spent an average 109 minutes watching videos at Google sites, compared to 19 minutes for Microsoft sites.

YouTube accounted for 96 percent of videos viewed at Google sites. To think, it all could have been Microsoft's.

About six months before Google's October 2006 $1.6 billion acquisition of YouTube, Microsoft passed up a similar opportunity for a mere $500,000. Microsoft does build-versus-buy analyses when evaluating acquisitions. With YouTube, Microsoft chose to build MSN Soapbox instead. In retrospect, Microsoft made not just a bad call, but a terrible one.

As I explained last week, time online is more valuable for generating long-term advertising revenue than unique visitors, or clicks. Google has that and something better:

• Video viewers are captive to ads placed before the video begins; those eyeballs are more guaranteed than with banner ads or search keywords.
• Videos' viral nature make short, easily watched videos possible runaway hits. The average video was about 3 minutes, in March.
• The sheer number of videos watched increases the number of potential ad impressions—those that are fairly assured.
• Amount of time spent online viewing videos can far exceed number of unique visitors. ABC only had about 7 million unique viewers but ranked second for time spent watching videos.

Google is only early stages exploiting the ad possibilities, but big they could be. And it all could have been Microsoft's.

So the company that let the little fish get away—the one that grew up to be really big—wants Yahoo instead. What's that saying about entering new relationships on the rebound? Microsoft blew it big time with YouTube, and now execs seem committed to buy anything and everything else. They won't again miss the choice catch.