By 2010 more than half (55%) of all the video content consumed online in the US will be user generated, representing 44 billion video streams, according to a new forecast from Screen Digest.
Screen Digest says that 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.
Arash Amel, Screen Digest senior analyst and the report’s author, Arash Amel, said: “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. The interesting developments in this market are going to be about who can monetise user generated online video, and how they’ll do it.”
Amel continues: “2006 was a phenomenal year for UGOV, with exceptional growth in the number of UGOV streams and with Google’s $1.6bn acquisition of the 18 month old YouTube.
At the same time it’s also proving rather difficult for UGOV sites to monetize their video streams. Added to recent high profile executive departures from two significant players in the industry, Revver and Guba, the signs are all there that the honeymoon period is over.”
“UGOV sites need to diversify to survive. With the dominance of YouTube and MySpace Video, smaller sites are going to need to offer something different. Emerging alternative offerings include online editing, revenue sharing with content producers and hybrid services which offer both premium and user generated content.”
UGOV in Europe remains a fledgling industry in comparison to the US market. Amel believes that we’ll see localised versions of the big names like MySpace appearing alongside new regional sites.
A recent study from Informa Telecoms and Media and its strategic partner the Mobile Entertainment Forum, said that the market for mobile communities and UGC will be worth $13.2 billion by 2011, with photo and chat based services being the top revenue generators (see Mobile Communities And UGC To Be Worth $13.2 Billion).
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