"User generated videos slow to generate revenue."
The honeymoon for user generated content is over, according to new research which indicates that while consumer usage exploded in 2006 revenues will prove slow to develop.
Research from Screen Digest shows that user generated videos accounted for more than half of all online video content, but will make up just 15% of total revenues.
The user generated online video market (UGOV) exploded in 2006 and by the end of the year, user generated videos made up 47% of the total online video market in the US.
Screen Digest believes that advertising will be the principal source of revenue for UGOV sites. In the US ad revenues will grow from $200m in 2006 to almost $900m by 2010. This represents only 15% of all online video revenues.
So whilst there is no shortage of consumers ready to use these sites, the key challenge facing the many companies that now operate in the UGOV arena is finding a business model that will make them financially viable.
According to Screen Digest, there are five business models currently being used to make money from UGOV:
- Content Licensing
- D Commerce (digital sales and rental of premium movie and TV content
- Technology Licensing
Whilst they are experiencing a period of trial and error searching for the right advertising formats, the sites risk losing their ‘cool’ factor as users are turned off by finding mainstream advertising on their personal videos. Arash Amel, Screen Digest Senior Analyst and the reports author, comments: ”As yet though, no one has found a way to make real money from the huge audiences who participate on these sites.
"User generated online video will drive the majority of Internet content consumed in the future, but despite its huge popularity with web surfers worldwide, the major players have yet to find a way to generate significant revenues from it."
Why has user generated online video proved to be so popular now?
The popularity of user generated video online reflects what the Internet has emerged to be all about – empowering and connecting people.
In 2007 expect to see videos on Sumo.tv, YourkindaTV and Putfile in the UK, MyVideo and Clipfish in Germany, DailyMotion, YooTribe and Wideo in France and Flurl Media in Belgium.
Source: Screen Digest