Here are my top four non-intuitive predictions for online video in 2010:
1. Largest video properties won't produce any video. By the end of 2010, the majority of the top 10 video properties (as measured by comScore or your preferred third party) will be video companies that don't produce any meaningful amount of video content. This means the top 10 properties will be dominated by video-sharing sites (YouTube), video ad networks like my company, video syndicators (Grab Networks) and vertical video sites (Break.com). Yes, some of these players produce some content, but the vast majority of the views on their properties are generated from content they did not produce.
This is very similar to the dynamics we have seen in display advertising. There, the top 10 properties by reach (as measured by comScore) are all either portals (Yahoo / Google) or display ad networks (Specific Media / Adconion). The power of content and audience aggregation is self-reinforcing, and we will see the same development in the online video category.
2. Stream fraud becomes online video's click fraud equivalent. The large video players have discussed the issues of fake pre-roll, auto-start in-banner video being sold as pre-roll, and the actions of bad actors in the online video business ad nauseum. However, based on our analysis of the business today, stream fraud (running a video advertisement in a way that is counter to how it was sold in the marketplace) is a larger problem today than ever before. In fact, we believe at least 25% of all video advertisements served on the Web are served in a fraudulent manner, and that most of those ads are served by major players on behalf of big-name marketers.
This means the bad actors on both the publisher and the ad network side of the business need to develop anti-fraud technologies to address stream fraud, or they risk losing business to the players that have solved this problem. Furthermore, in 2010, I believe it's the advertisers who will be driving the measurement and anti-fraud conversations -- a first for the video advertising business.
3. Video ad networks will compete more with display ad networks for display advertising. Andy Atherton, CEO of Brand.net, recently wrote that VAST is the panacea for display ad networks to compete in the video advertising business. Unfortunately, his article only demonstrated the industry's vast lack of understanding of the state of the video advertising business today. In fact, video advertising networks sell far more display advertising than display networks sell video advertising, and this gap is widening fast.
Three reasons explain why video networks are increasing their display presence. First, access to display inventory and user data has been almost completely commoditized, and the massive display networks with proprietary inventory, technology or data hold the only real differentiation left in display. Second, most rich-media advertising is essentially poor man's video advertising. Most advertisers would prefer to run video in display placements if possible. Lastly, video ad networks are far ahead of the curve with respect to high-quality inventory, transparency and brand-safe selling -- all of which are the drivers of future display advertising growth.
4. Facebook becomes the No. 2 video streamer in the world. I believe that in the next three years, Facebook will inevitably be the No. 1 video streamer in the world, as measured by the number of total monthly streams. The challenge is getting the timing right. So, I am hedging my prediction that Facebook will be No. 2 by the end of 2010.
Once Facebook gets highly profitable, a scenario that's very close, it will make the decision to host the world's videos in the same way it hosts the world's images today. This is not a cheap proposition: video hosting is more expensive than image hosting, and image hosting is perhaps Facebook's single largest expense. However, there is no doubt that within 12 months after this decision, Facebook will stream more video worldwide than YouTube. People often forget that Geocities used to be No. 1 in personal Web sites, MySpace used to be No. 1 in social networking, and Flickr used to be No. 1 in photos.
My projected 2010 trends will likely benefit some folks more than others, but I think the metatrends of increased video consumption, video monetization and video technologies will help all players. Let me know if you agree or disagree with these predictions, or if there are trends I have missed. I'm looking forward to grading myself on the accuracy of my predictions next year.