I don't know if many of you have heard, but online video is kind of a big deal. If you are a dedicated reader to this site, you might have seen articles that mention this every so often. We know that YouTube is trying to put itself everywhere a screen exists and is throwing money at big names to produce original content, and in the end, hope to bank a few dollars off of it. We know Netflix is trying to find as much content as possible and is expanding to places outside of America it seems like every week.
Businesses are looking to reach new customers with branded videos, and the growing thought is if you don't do online video, you're going to be left behind. The reach and the popularity of online video will translate into triple the revenue from last year.
$3 Billion This Year, And In 2015…Well, More
Yep, according to Futuresource Consulting, in a study of four big online video-consuming countries, the amount of paid-for and legitimate free online views is expected to exceed 770 billion this year, from 640 billion in 2010. The study was conducted using the US, UK, France, and Germany, with the US being the big leader in online views, mostly through Netflix. The study states that $3 billion in revenue will be generated this year, and in 2015, we're looking at $7 billion.
While online video continues to battle the likes of TV for dollars, Netflix, YouTube, and Apple are expanding their availability into all sorts of territories all the time, and the amount of paid-for online content will continue to grow as those big names put their flags in new grounds. However, as we all know, ads are becoming even bigger with free content and we will be seeing a spike in that kind of revenue as well.
As Mai Hoang, Senior Analyst at Futuresource says:
Brands have only recently started to harness the full potential of online video…with ad-funded revenues expected to grow by 50 per cent in 2011 as advertisers continue to develop and refine content specifically for the online environment, rather than repurposing content originally destined for television. At the same time, consumers become more receptive as ads are effectively targeted.
In other words, businesses are getting better at making branded video that appeals to an online viewer. They are beginning to see that what an online viewer responds to is different from traditional TV viewers. And the more traditional ads that do make it to online video are getting better at finding the right people. The study cites the use of YouTube's "Skip This Ad" feature being a big deal: popular ads get better rates, and the ones that get skipped a lot make online advertisers go back to the drawing board and try to make something more appealing.
Also, there is no doubt that the continued popularity of the mobile devices and tablets are making content creators scramble to find a way to monetize their product on all of these gadgets.
Now, I'm beginning to wonder if the 2015′s projected $7 billion figure might be selling online video short, even though that is a lot of money. With Cisco predicting 90% of Internet traffic being online video by 2014, Netflix and YouTube's continued expansion, the tremendous growth of mobile devices, it's not hard to think of an even larger number. Especially since we're looking at triple the revenue this year, the idea that the money would only be slightly more than double in four years seems a little off. Plus, this study is just these four countries, so there's no doubt other territories are and will be a huge factor.
No matter what though, this study pretty much confirms what we know about online video. It's huge, and it's going to get bigger.