Fullscreen generates content that attracts about three billion views on YouTube.
Yahoo has reportedly made a $250m offer to buy California-based YouTube content provider FullScreen to make its platform more attractive to young users.
Founded in 2011, Fullscreen generates content that attracts 3 billion views on Google's YouTube platform and claims to have 365 million subscribers.
Yahoo's bid will have to compete with private investment firm Chernin, which is also seeking to gain control of the company, according to Britain's Sky News.
Chernin already has a stake in Fullscreen, which it bought along with advertising firm WPP and Comcast Ventures in June 2013.
Fullscreen plans to use the investment to expand its domestic and international operations, including its content, technology and sales effort, especially in fast growing economies like Brazil, India and Russia.
The company also plans to use the investment to fund its content initiatives and adopt its SAAS technology, which will enable video creators and brands to build and engage with desired audiences online.