When Will Online Video Pay Off?
July 13, 2008 4:59 PM
In the last three years, investors have shoveled more than $8 billion into the online video business, but have yet to see much in the way of return on investment. That’s the conclusion of a Silicon Alley Insider report on the so-far sorry state of making money on Web video.
And if you look at the ad predictions, it may be quite some time before investors make back that $8 billion. Forrester Research said advertising in streaming video hit $471 million last year and should reach $7.2 billion in 2012. That’s still less than the total investment. While advertising is not the only revenue stream – online video technology firms for instance get paid license and delivery fees – it is ultimately the financial foundation for the industry.
The industry has yet to produce a profitable company, Silicon Alley Insider reporter Michael Learmonth said in his report. He arrived at the $8 billion figure by adding together venture funding numbers from Dow Jones VentureSource as well as acquisitions, like Google’s $1.65 billion bet on YouTube.
Still, Learmonth concludes the money spent is not “outrageous” because online video is still new, consumers are watching a lot of Web video, and advertising will keep flowing into the business.