Wednesday, January 17, 2007

User-Generated Video Usage Booms, Ad Revenue Doesn't

User-Generated Video Usage Booms, Ad Revenue Doesn't


The user-generated online video market (UGOV) exploded in 2006 and by the end of the year user-generated videos accounted for 47 percent of the total online videos streamed in the U.S.

By 2010, more than half (55 percent) of all the video content consumed online in the U.S. will be user generated, accounting for 44 billion video streams; however, user-generated videos will account for just 15 percent of total revenues, according to Screen Digest, which studies the global media market and this week released its latest report on the UGOV market.
Screen Digest foresees advertising as the principal source of revenue for UGOV sites. It forecasts that in the U.S. ad revenues will grow from $200 million in 2006 to nearly $900 million by 2010 - just 15 percent of all online video revenue.


Although consumers have flocked to UGOV sites, the key challenge facing contenders in the UGOV arena is finding a business model that will make them financially viable.

"UGOV sites need to diversify to survive. With the dominance of YouTube and MySpace Video, smaller sites are going to need to offer something different," Screen Digest Senior Analyst and the UGOV report’s author, Arash Amel, comments.
"Emerging alternative offerings include online editing, revenue sharing with content producers and hybrid services which offer both premium and user-generated content."
In addition to Google, which acquired YouTube, and News Corp, which acquired MySpace, other key players were quietly entering the space in 2006 via acquisitions or new business initiatives. Sony, Time Warner, Yahoo, Microsoft, Turner, Comcast and Viacom are now poised to exploit UGOV opportunities.

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