Google’s (NASDAQ:GOOG) YouTube took yet another significant step, as the world’s largest video site has announced a deal with Walt Disney to offer the studio’s movies on rent.  After launching Google Music recently, Google is also building YouTube as a serious competitor to digital entertainment providers such as Apple (NASDAQ:AAPL) and Netflix (NASDAQ:NFLX).
Google Increasingly Looking Beyond Search
YouTube is the second-most popular website in the world after Facebook with over 800 million monthly unique visitors.  However, with a lot of user-generated low-quality content, Google has considerable scope to monetize YouTube’s web traffic even more. In a previous note we wrote how Google is considering to produce original content on YouTube, and now the rental agreement should provide further revenue upside owing to the sheer scale of the number of YouTube users. It seems that as Google Search has no near competitors, the company is increasingly shifting focus toward expanding its media offerings.
We currently have a price estimate near $628 for Google’s stock, which is around 10% above the current market price.
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