The Online Video Market's Dirty Little Secret

We have all heard the countless reports of just how fast online video is growing as the web experience continues to shift closer to a TV Metaphor (video) and away from a Print Metaphor (text on a page).

Online video is a seemingly unstoppable force, rapidly increasing consumption of online video seems to be growing in lock-step with continuing mobile growth, and online video advertising is now officially the fastest growing digital ad format in the universe.

  • 78% of the online population watches video every week, and 55% watch video every day (Comscore)
  • According to Cisco, consumer video traffic will double between 2013 and 2018
  •  Digital video ad spending will increase 41.9% this year, while TV advertising in the US will grow only 3.3% (eMarketer)

With all this growth and momentum, why is the online video market only a $6B market, shouldn't it be a $20B market and grabbing market-share/ad-dollars from TV budgets much faster?

 

The answer to this is yes, it should be - but it's not (as referenced in this recent article by Magid Research).

The market itself reflects a tremendous imbalance,  where as much as 98.2% of today's online video revenue is being generated across a shockingly small number of publisher sites.

To be more specific - 98.2% of the revenue (Tout analysis) is being generated across 2 sets of Publishers:

1.) The Big Consumer Portals: Google/Youtube, AOL, Yahoo, Facebook, Twitter

2.) The Top 10 Publishers in the major verticals of News, Sports, Entertainment, Lifestyle, etc

Imbalance_Chart_Tout 

Why is this such a problem - or holding back the market?

If you look at the highly concentrated and small set of publishers where online video revenue is being generated today Vs. where consumers spend their time online (according to Comscore).

 You notice that publishers that represent as much as 54% of where people spend their time online - are not participating in the online video market...at all.

Today's online video market is almost entirely made-up of a very elite and small group of publishers.

You begin to see the disparity between the "Video Have's" and the "Video-Have not's", and as you dig-further down into this imbalance - you see that most of these Top 10 publishers by vertical where revenue is being generated today...are broadcast media companies. Brands like ESPN, Fox Sports, CBS, CNN and many others.

These are companies who know how to consistently create high-quality video content - they have been doing it for years. The shift towards a more "TV-Metaphor" web experience comes naturally for these companies...and it should because at their core, they are TV companies.

Pure-play digital publishers do not have it so easily, and yet if you could begin to unlock and activate this mid-tail of the web who are not participating in online video today - arguably, you could more than double the size of the market in short order.

 

This is the opportunity we are attacking at Tout.

-MD

 

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