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Tuesday, December 09, 2008

User Generated Content Is Dead

Five years after Youtube exploded onto the scene, the video hosting site is still searching for a reliable monetization method and the future of online video content will be free TV, I.E. Hulu.

Arash Amel, head of Broadband Media at Screen Digest, co-hosted a webinar with Ooyala titled "The Economics of Free."ooyala logoOoyala and Amel both made some interesting points regarding the future of generated content  versus the outlook for premium TV content.
 

User-generated video accounts for majority of video consumed in the United States, but  what we're seeing is the bulk of revenues is coming from premium TV programming. By 2011, ad-funded free to view TV shows will account for 10 times more consumption than paid.By 2012, premium TV programming will have 10% more consumers than user-generated.
 

Youtube dominates in Europe, and despite the fact that Europe offers more choices and cheaper prices for broad band, monetization of online video on a free distribution model has proven to be difficult. Why is free premium TV video easier to monetize? A good illustration for the  found in the comparison between the U.S. and European Markets

Consider these figures: In the best case scenario, Free TV video can earn $.25 cents net per-view, while the UK's online video platform earns  $.7 cents per view at-best, and loses money at worst. Large-scale media companies  can leverage delivery costs and keep them low for significant net return, but regional broadcasters have made poor tech choices and poor advertising strategies. Amel believes those aforementioned obstacles, coupled with size and scale prevents large deals compared to large U.S. networks

"The U.S. has managed to build sustainable services based on leveraging brand and scale, but not everybody can leverage scale of U.S. media."

Conservative estimates show U.S revenues for free online video content should be just over $1billion by the end of 2008 and around 2.4 billion by 2012, forecast underestimate. As for the Big 3 in Europe (UK,France and Germany) are expected to have- $540 million by 2012.

Sean Knapp,co-founder of Ooyala, described the online viewing audience as "Segregated, disloyal and distracted". Those characteristics favor Hulu over Youtube. Youtube's coresite of 78.4 million users includes 22% of views off-site, but Hulu's audience includes 70% from affiliate sites and viral distribution. Hulu, which has contracts with Newscorp and NBC/Universal, has become the poster child for applying YouTube's concept for premium content.

Ooyala's new video platform, Backlot, was designed with free TV (ad supported) video in mind. Backlot features is a scalable video platform with detailed analytics, content syndication controls, advanced monetization features. Ooyala partners with Google and Hulu,  and it knows the value of premium TV content, that's why some of its notable customers include: Warner Brothers,National Geographic, IMG, and Sony.

By Matt O'Hern at 03:35 PM | Comments (1)

(1) Thoughts on User Generated Content Is Dead

I am the CEO of Veeple (Video as a Service), and am also on the board of a web filtering company. Video, like web content filtering, will break into at least 3 distinct segments: High-end, SME (Small to Medium and the 'Pro-Tail') and Low-end /UGC (or the long tail). By 2012, every site in the world will have rich media / video. The opportunity is massive.

Comments by scott broomfield : Tuesday, December 09, 2008 at 05:34 PM

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