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The Next Step For Online Video Sites

Mike Sachoff
Staff Writer
Published: 2007-01-16

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User generated online video made up 47 percent of the total online video market in the US in 2006. By 2010 over half of all video content viewed online in the US will be user generated.

Media research analyst Screen Digest projects that online user generated video content will account for 44 billion video streams. The total revenue from the videos will make up only 15 percent of total revenues.

Screen Digest believes that ad revenue for user generated video will increase to $900 million in 2010 up from 200 million in 2006. The total video ad revenue will be $6.2 billion in 2010, up from $1.2 billion in 2006.

Placing ads on user generated videos is seen as risky to advertisers as they are worried about the potential for offensive content and that their ads will be viewed as an annoyance.

Screen Digest Senior Analyst Arash Amel said, "User-generated video is going to have a lot of issues to resolve before it becomes an effective advertising medium," he said. "There's how will people react to personal media with ads, and how will advertisers feel sitting around rude or offensive content."

In the report Amel goes on to say that smaller user generated online video sites will need to diversify. "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. Emerging alternative offerings include online editing, revenue sharing with content producers and hybrid services which offer both premium and user generated content."

The report also notes that major media companies that missed out on the beginning of the video phenomenon have been relatively quick to make adjustments through acquisitions or new business initiatives.

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