Yahoo can broaden its reach to a younger audience through the Fullscreen, which generates more than 3 billion monthly views on YouTube.
Sean Capital, senior editor at Tom's Guide points out Yahoo is a major portal and is the first stop for a lot of people in the morning, which can help the Internet giant capitalize on the purchase of Fullscreen.
"But if Yahoo wants to be a Youtube competitor, it's in for a hard battle. YouTube is the place people look for video of all kinds," Captain said. However, he added that it wouldn't be the first acquisition by a big tech or media company that fails to deliver, such as The New York Times' acquisition of About.com.
"Simply buying Fullscreen won't guarantee Yahoo that the viewers who currently watch on YouTube will follow. In fact, most won't. That, I think, would be the risk if this is a pure traffic/audience play. Instead, I'd hope Yahoo would see this as more of a way to build a more strategic video and content network of its own," said Christina Warren, senior tech analyst at Mashable.
—By CNBC's Christina Medici Scolaro