Google looks to monetize games, videos

Google this week added new money-making engines to two areas of keen interest to telecom service providers: games and online videos.

The search giant has built its empire on the simple targeted text ad, which works well on the Web – and it hopes on the mobile Web as well – but not as naturally in other online environments, in particular on its YouTube video site.

On the YouTube front, Google has experimented with pre-roll and in-context scrolling text ads. Its latest ploy is to add e-commerce affiliate links to its videos, for instance, enabling a visitor watching a particular music video to buy the physical CD from a participating retailer, such as Amazon.com. YouTube would make a small cut on the referral.

The program will start with EMI on the music side (and retailers Amazon.com and iTunes) and Electronics Arts for games (in partnership with Amazon.com).

“This is just the beginning of building a broad, viable e-commerce platform for users and partners on YouTube,” said Glenn Brown, YouTube strategic partner development manager, in a blog post announcing the new capabilities, noting that content providers in music, movies, TV and print would eventually be part of the program.

Interestingly, Google and YouTube will not only work with content providers to add e-commerce links but also, via its content identification and management system, place e-commerce links on user-generated contents. That system has mostly been used to help content providers force the takedown of copyrighted content posted by individual users; it now could potentially be used to monetize such “pirate” content.

Despite generating massive levels of video viewing, YouTube is on a pace to earn just about $200 million in revenue next year, according to Piper Jaffray Research.