The Online Video Bonanza

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The Online Video Bonanza

As Bill Gates told a gathering of business leaders at the World Economic Forum in January 2007, within five years consumers will abandon television in favor of watching video online. As Reuters1 reports, Gates believes that television programming will be delivered over the Internet, and viewers will be able to select what they want to see, when they want to see it. This outlook is particularly amazing when you consider that in 2005, only 10 percent of Web sites offered video clips.

Today, as the laggards upgrade their slow dial-up connections to broadband, online video is experiencing explosive growth. Nielsen/Net Ratings research reveals that 70 percent of Internet users now have high-speed access, which is essential for viewing video. And, according to a study by Advertising.com, 66 percent of all Internet users over the age of 18 watch online video at least once a week.2

Moreover, according to comScore VideoMetrix, 60 percent of Internet users downloaded or watched video online in July 2006. At an average of more than two videos per day per user, nearly 7.2 billion videos were being watched in a single month.3

Sites such as YouTube, where users stream 100 million videos each day, were created specifically to capitalize on the growing demand for sharing user-created videos. Social-networking sites such as MySpace have migrated beyond text, photos, and music clips to increasingly incorporate video in members’ profiles. At the same time, traditional content providers are increasingly adding professional video to their sites. ABC, CBS, NBC, Fox, Comedy Central, MTV, and the Discovery Channel all post television shows and news reports online.

In fact, this trend is so explosive that we can’t hope to address every important implication. Consequently, we will use the next few minutes to consider four big questions:

  • Which online video sites are attracting the most traffic, and which types of videos are people watching most?
  • What are the implications of online video for the commercial film and television industries?
  • How can advertisers use online video to deliver their messages to prospects?
  • How will the massive volume of online video be organized so that users can find the content they want to watch?

Research by comScore VideoMetrix4 found that the 10 most popular Web sites for online video are, in descending order:

  • Yahoo!
  • MySpace
  • YouTube
  • Time Warner/AOL
  • Microsoft’s MSN
  • Viacom
  • Google
  • Ebaums World
  • Major League Baseball
  • ROO Group

What are people watching online? A study by Burst Media5 found that the 10 most-watched online video content categories in 2006 were:

  • News clips, watched by 45 percent of adults with Internet access...

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