Commentary

Traditional Video Still Almost 100 Times More Popular Than Online Video

According to the recent Magna Online Video Forecast, the US market for online video will grow by 32% this year, rising from $531 million in 2008 to $699 million in 2009. Though these figures represent downward revisions from a previous forecast, these gains, says Magna, will likely outpace growth rates for most other emerging media platforms.

The report says that as marketing budgets are reduced across industries, advertisers look to reach their consumers in a more targeted and cost-effective manner. In recent periods, the expanding availability of premium network and cable TV programming combined with increasing broadband penetration now covering 60% of US homes by Magna estimates, collectively led to a 24% increase in time with professionally produced online video during 2008, following a 50% rise during 2007, according to Accustream.

Internet Access, Broadband Households

Year

Subscribers(Millions)

Actual

1999

1.7 mm

2000

5.1

2001

10.8

2002

17.1

2003

25.6

2004

34.8

2005

43.4

2006

54.8

2007

63.6

2008

69.5

Estimated

2009

73.9

2010

76.8

2011

79.2

2012

81.6

2013

84.0

2014

86.5

Source: MAGNA, US Census, April 2009

Few large advertisers can achieve broad reaching objectives solely by using an online video-only campaign if there are any content preferences involved, concludes the report. As a point of reference, during 2008 490 billion person-hours of traditional television were consumed according to Nielsen. This equates to 244 times more consumption of professional content video than of online video. Even assuming last year's growth rate continues through 2012, traditional TV would still account for 98 times more consumption

2012 Traditional TV "Popularity" Vs. Online Video(Scenarios Assuming 4-Year Compounded Growth Rate of Online Video)

Growth Rate of Online Video Assumption

Relative Consumption of Professional Content Video(times as much)

10%

158.5X

15

132.7

20

111.9

24

98.0

25

95.1

30

81.3

35

69.9

Source: MAGNA. 2008 Growth Rate from Accustream, April 2009

Over the next few years, says the report:

  • TV content, and traditional TV suppliers, will continue to account for the bulk of online video budgets, but as user-generated content sites increasingly supply professional content to their mass audiences, these sites will produce faster rates of growth.
  • Ad networks will continue to serve a valuable niche to the ecosystem, aggregating otherwise unsold (or undersold) inventory in an efficient manner, with cost-effective ways to reach large audiences
  • Traditional print publishers will continue to hold valuable inventory, but few will produce significant volumes of content to capture much market share

In total, by 2011, the study projects online video to generate slightly more than $1 billion in net advertising revenues for video content. This represents a compounded annual growth rate of 36% for each year between 2006 and 2011.

Online Video Advertising Revenue

Year

Ad Revenue(millions)

2006

$215mm

2007

360

2008

530

2009

699

2010

864

2011

1,009

Source: MAGNA, April 2009

For more from Magna about the Online Video Forecast, please visit here.

 

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