Yahoo is being acquired by Verizon for $4.8 billion. Although it is much less than $100 billion, Yahoo's value in 2000, still many are asking question, why exactly is Verizon paying so much money for faded internet giant.
Yahoo is being acquired by Verizon, a mobile telecom provider, for $4.8 billion. An estimated 1 billion users either visit Yahoo regularly for things like sports, financial news or use one of Yahoo’s email, photo-sharing, and other services. Still many are asking question, why exactly is Verizon paying so much money for faded internet giant.
The short answer is advertising. Verizon wants core editorial business of Yahoo. This basically means that Verizon is interested in buying Yahoo’s ad and content businesses. It must be taken in account that it acquired AOL last year for $4.4 billion. Now to build scale and make money from digital advertising on mobile devices, it has taken over Yahoo.
Verizon is trying hard to move its business from analog to digital. It believes that a combined AOL-Yahoo would push it into the digital advertising platform, especially in videos.
AOL does not have much digital content, but it has impressive combination of ad-buying and targeting tools— especially for video. Verizon has also acquired other advertising-related businesses, including Microsoft’s ad-technology operations and an ad-technology company called Millennial Media. So far it has used these to launch Go90, the mobile streaming-video service.
Like Verizon-AOL, Yahoo also has advertising technology. It should fit pretty well with what Verizon and AOL already have. This combination would give Verizon a powerful platform of targeted mobile advertising, a lot of content, and a built-in audience.
Yahoo live streamed one of the NFL games. Total 33.6 million people watched that stream. Although there were few technical hiccups like buffering, but it was a true mobile experience. Verizon seems to be a perfect fit for expanding these types of sports live stream experiences.
Most companies have realized benefits from being associated with Yahoo livestream. Verizon will try to garner more advertising dollars from similar future licensing deals. Verizon is also one of the Sponsors of the NFL.
Verizon might also be interested in more monetizing of Yahoo’s Fantasy Sports Platforms. Currently Yahoo’s fantasy sports products have revenue of $200 million. So far it is mostly advertising, but other avenues fantasy sports products also have to be explored. They are still in nascent stage right now.
Yahoo brings that nostalgic feeling of good old days of internet. Being one of the most important companies of the first dot-com boom, its life has come to end now. At its peak, this company was valued more than $100 billion. Yahoo decline came when it failed to capture anything worthwhile in social media and mobile. Although we would hear Yahoo name still, but it will no longer be the same trend-setter as it used to.
May God give peace to its soul.
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