Email This PostIn many interesting blog posts from NewTeeVee, Contentinople, and Digital Media Wire to name just a few, have discussed the video advertising outlook for 2008.
Research by Yankee Group suggests that revenue attributed to downloads and in-streaming advertising is forecasted to grow significantly over next five years. By 2011, in-stream advertising revenue is expected to reach $3.89 billion dollars and revenue for downloads will contribute $850 million.
Two important metrics driving the growth of these revenue streams are the number of users who watch online video and the amount of time spent watching online video – both of which are on the rise. As the number of users and time spent viewing video increases, advertisers will bid up the CPMs thus driving higher the top line revenue attributed to in-stream advertising. IDC research also suggests that approximately 1,200 terabytes of data are consumed each day in the U.S. alone by users watching online video. This number is expected to grow to an astonishing 7,800 terabytes/day by 2011.
Pre-roll and in-stream video ads, whether online or mobile, represent a huge opportunity to monetize content. The opportunity also creates additional stress on existing transcoding resources, requiring operators to increase their transcoding capacity to keep up with the push to monetize more content in more formats. We agree with Jay Braage, that online video is the key to the media castle – but new approaches to video transcoding is what will help deliver video to wider audiences and thus giving operators new opportunities to cross-market content and open new advertising and revenue streams.
I agree - we are reaching a critical mass in online video consumption as content availability, quality, broadband penetration and finance via advertising have collided over the last couple of years.
Braage makes a good point about media execs having a plan to recapture viewers lost to the Internet, but I don’t know that it will be successful. A lot of these media conglomerates gained their dominion over the industry by leveraging their (expensive and difficult-to-replicate) distribution power…and the means of distribution are getting easier and easier. I believe that the Writers’ Guild strike will be seen in retrospect as a turning point for media.
On the Ripcode side of things, it seems to me that solving the problem of transcoding will go a long way towards making delivery mechanisms transparent for new media, as they will have to be for it to really supersede broadcast media.
It’s good to see this blog updating so much - you guys have great things to say!
Thanks TJ - expect to hear some new announcements on on-demand transcoding and pre-roll advertising in the near future.