Daily Motion is escalating the battle for #3 in their space (after YouTube and MySpace TV).
Online video advertising is growing, quickly.
Online video advertising is where search advertising was in 2000-01: a major part of the web ecosystem desperately looking for a business model.
Unlike search - where traditional media companies failed to invest and even new media companies gave up in favor of portaldom - a lot of companies are vying for online video supremacy. My read on it is that we will never have a Google of video. That’s right, even YouTube - incidentally owned by Google - won’t command the kind of revenue within its segment that Google does. The reason for that is lack of competition and monetization ability. On the former, YouTube has a lot of competition in the monetization race.
Either way, looking at the stats, the numbers are impressive:
An estimate of the US online video ad market for 2009 - set in 2004: $657 million | Source.
An estimate of the US online video ad market for 2009 - set in 2005: $1.5 billion | Source.
An estimate of the US online video ad market for 2010 - set in 2006: $2.3 billion | Source.
An estimate of the US online video ad market for 2010 - set in late 2006: $3 billion | Source.
An estimate of the US online video ad market for 2011 - set in 2007: $4.3 billion | Source.
An estimate of the Worldwide online video ad market for 2011 - set in 2007: $10 billion | Source.
An estimate of the US online video ad market for 2012 - set in late 2007: $7.1 billion | Source.
An estimate of the US online video ad market for 2012 - set in early 2008: $6.6 billion (all broadband at $12.2B) | Source.
It’s thus not surprising to see the sheer volume of money that is being invested in the space, here is an incomplete snapshot:
Judging from that, investors better be patient because only YouTube has exited, handsomely, to the tune of $1,650,000,000 (that’s $1.65B, in case you’re wondering). I’d like to remind everyone that more money does not equal more return, but I digress.
It’s worth noting, too, that YouTube raised less money than everyone else in its peer group but I highly doubt anyone in that group will be worth more, ever, than YouTube.
I am personally hoping that WatchMojo.com pulls the same feat in its peer group. I won’t say “jokes aside” because I am not exactly kidding, admitting that yes, indeed, we’ve raised - and spent - less than $5M to build our content and distribution, which is actually bigger than some of our peers. You might notice that I do not call the players in our group competitors because we are the bastard children of the broader video space: everyone is betting heavily on platforms and user-generated content and our category is definitely going against the grain.
Lastly, I think most of these players are pricing themselves out of exits:
- IPOs will be very hard: yes online advertising is growing quickly but I suspect traditional media (that owns rights to the content) will garner a big share of the online video ad pie. In this context, hitting $100M in revenues or more becomes very challenging, especially with the low-quality content most of these sites are trying to monetize.
- M&A becomes nearly impossible because you need to sell for more than you have raised, and judging by Revver’s fate (who raised $12.7M and sold for less than $5M) that becomes quite hard.
It’s a good thing I am no low-expectations mofo… just because we have not raised boatloads of cash (yet anyway) does not mean we’re not gunning for a big payday one day, but realizing that such a day might not materialize tomorrow, I respectfully think a lot of the companies in the broader video space and our content creation space in particular have dug too deep of a hole for themselves.
To each their own.
This is a work in progress, I am adding CMS platforms (Brightcove, Maven, etc.) and CDNs (Limelight, Akamai, etc.) as we speak. If you have more companies and funding amounts, or if I made a typo, leave the correction in the comments or email me at ash@mojosupreme.com.
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WatchMojo NewsletterAlley Insider echoes what I’ve been saying about the numbing (and dumbing) number of “stream yourself to the Web ” services out there.
They argue that this segment has taken the baton from YouTube clones with regards to where the bubble has moved in online video. But, they skip one segment, which is video ad networks.
Anyway, at last count, there are 14 ways to stream yourself to the Web, but to advertisers that is 14 too many.
That’s right: herd mentality galore. From SAI:
Will any of them pan out? Probably: If there’s an audience for the Numa Numa Dance, then anything’s possible. But if you think YouTube or MySpace have a hard time selling ads, imagine the challenges monetizing Stickam’s crude video, or the exploits of JustinTV’s Justin, who doesn’t really have any exploits to speak of.
Yet Yahoo thinks enough of the possibilities that it launched its own streaming service, Yahoo Live, this month. So how do the live streamers stack up? We’ve rank them based on the odds they’ll survive long enough to be acquired.
I don’t want to say this, because who knows if we have the strategy right (that being that advertisers want premium video content, and not UGC), but this is just lunacy and insanity. Streaming yourself to the Web is just part of the Bubble watch, the other is in UGC-How to Videos… Here’s an email I just got:
I’m from a brand new how-to website called *. I think your videos are great! - and I think they’d do well on *.
(…) It’s an awesome concept, so if you’re interested check us out. I can answer any questions you may have.
Hmm… too bad there are about 14 of those, too. Online video advertising is going to be an enormous chunk of total advertising revenue, and you almost can bet that most of these companies are going to miss that bull’s eye by a mile.
MTV Networks is about to launch a patents-centric ad network. That’s not a bad idea at all. In fact, MTV can leverage its relationship with advertisers and target sites outside of MTV Networks’ portfolio to generate a lot of value.
That’s the theory. In practice, ask yourself if a competing media company like NBC Universal, CBS, News Corp. or Walt Disney would really welcome MTV owning the relationship with advertisers and users on its sites.
Al Qaeda has a higher likelihood of celebrating American Presidents Day than that scenario people. Let me say one thing: media companies probably hate Google and YouTube et al., but they also hate one another. They won’t say that, so I will say it for them. The “bad blood” between GooTube and Old Media is, what, 5 years old?
- John Malone and Barry Diller have hated one another for years.
- John Malone and Rupert Murdoch? Ditto.
- Rupert Murdoch and Sumner Redstone? Ditto.
The point is, on the personal front, there are a lot of obstacles for these “networks” to succeed, but the biggest one is business:
Ad networks succeeded because they were independent upstarts that posed no threat. Last year that all changed when Right Media sold for $750M, Blue Lithium for $300M and so on.
Since those deals, every one is getting into the ad network business:
- Last week Comcast and a consortium of 3 newspapers got in on the fun.
- Last year, News Corp. said that they would too.
I know what you are thinking: Ash, these media-company-driven-ad-networks don’t really expect to get any real estate on other media companies’ websites, they are going after the long tail.
Bullshit. The long tail won’t make any impact on the finances. Companies like SpecificMedia, for example, blew up exponentially because they managed to get real estate on sites like ESPN, not HangoutForLocalSportsFans.com.
I suspect this is the latest strategy du jour infesting media companies, a month or two ago, they were launching their own UGC sites (how did Spike and iFilm fare?); in a month or two, this too shall pass.
PLAY
