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I love seeing insights like this in hindsight. I do remember google video. At the time I don't remember it being that much different in terms of features but as the saying goes "content is king".
Youtube made it trivial to embed videos into other websites. While Google Video didn't prioritize that at all for too long. So there was a time when youtube videos were embedded in pages all over the place. I remember that being why friends of mine put content on Youtube instead of Google video, while they were otherwise devoted to all things Google.
A lot of tech-savvy people complained YouTube had worse video quality and fewer features than Google Video. Obviously it didn't matter.
Jeff Huber was a Google SVP. Google did buy Youtube. Youtube ran using Flash... Google Video used Java (?). Nuff said.
Google Video player used flash.