Smaller screens, bigger opportunities

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To appreciate how far online video has come, consider a few contrasts between the 2008 and 2004 elections.

In the 2008 campaign season, primary debates were co-sponsored by YouTube, and questions from the public were submitted through the pioneering video-sharing site.

In 2004, YouTube did not exist.

According to Visible Measures, in 2008, footage of Sen. Obama’s election night victory speech received 500 unique online placements within 36 hours. That encompassed unique video clips, as opposed to multiple embeds of the same clip. Further, videos of the speech were viewed more than 6.8 million times in the first 36 hours (not including live streams or feeds from broadcast sites other than NBC.com).

In 2004, the online video infrastructure could not have supported anywhere near that level of viral syndication.

A huge video market is developing online.

eMarketer projects that the US online video audience will grow to 190 million people by 2012—that will be 88% of the Internet user population.

US Online Video Viewers* and Online Video Advertising Viewers**, 2007-2012 (millions and % of Internet users)

“After some false starts with ill-fated transactional experiments, online video content owners and distributors are pursuing a strategy that closely follows the standard TV business model,” says Paul Verna, eMarketer senior analyst and author of the new report, Video Content: Harnessing a Mass Audience. “The bulk of online video programming is now supported by advertising, with ad formats ranging from in-stream ads—prerolls, midrolls and postrolls—to in-text and in-banner ads.”

Although many consumers are loath to sit through ads when watching online video, they seem even less willing to pay directly for content.

According to a study by The Diffusion Group (TDG), as ad-supported video grows the balance of the inventory will tilt toward longer-form content.

TDG analysts projected that in 2013, long-form video will represent 69.4% of ad revenues, up from 41.6% in 2008. Alternately, in the same timeframe, the share of short-form video will decline from 54.8% to 28.7%.

Of course, viewing online content on a television is still unwieldy, costly or both.

“Cable and satellite providers, ISPs, TV manufacturers and developers of set-top hardware have yet to come up with compelling solutions,” says Mr. Verna. “However, once this domino falls—and it is almost inevitable that it will—online video will take a major leap into an interconnected future.”

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