There are too many Web video companies; they won't all survive.
Business 2.0 magazine reports that there are some 173 Web video companies, including 85 that host and share videos; analysts and
observers have been saying for a long time that a shakeout among Web video firms is nigh. In April alone, three such firms each received $30 million in funding. One of these, of course, is YouTube,
the Palo Alto-based viral video phenomenon that serves 50 million videos a day. What then, you might ask, does YouTube need more venture capital for? If they served ads on a $1 CPM, YouTube would bag
close to $20 million a year in ad revenue. However, they don't serve ads in videos yet, partly because copyright infringement on YouTube is still widespread--and advertisers don't like to be
associated with that kind of thing. By the way, copyright problems aside, a content-sharing company the size of YouTube could easily spend $5 million per year on bandwidth and hardware. "People
underestimate the costs and overestimate the inventory," one Silicon Valley veteran said. We're talking about YouTube, too--one of the biggies in online video. So what does that mean for the rest of
the industry? "There'll be a lot of casualties in the next year," one online video exec said, adding that he's moving on to video-hosting and content distribution for big brands. You can say that
again.
Read the whole story at CNN Money »
