• Marketwatch, Wednesday, January 10, 2007 11 AM

With hundreds of millions of people watching Google's YouTube and other online video sites, will today's big-budget Hollywood production become a thing of the past? Big-budget productions will become "a crapshoot" at best, that could either become a hit or a big waste of money. The result is that big media companies will gamble less on blockbusters and distribute more amateur and low-budget content, while taking on a long-tail-oriented revenue stream.

2007 prediction: video will drive online advertising. Unfortunately, this means the quality of content will continue to decline as fragmented media consumption forces media companies into lower production budgets.

Marketwatch posits an interesting idea, but the history of the Web hasn't worked that way. If anything, media consolidation persists in the Web business now more than ever--even if consumption is becoming more fragmented. At the end of the day, most people still go to a few sites (i.e. MySpace and YouTube) to consume user-generated content. The content is less long, but hot videos can still drum up very significant usage. People still have an appetite for slick TV shows and movies--and that's not going to change this year.

In fact recent studies have shown that people are consuming more media than ever. The pie is just getting bigger, that's all, and it's a good thing for everyone. Meanwhile, the video advertising business faces many potential setbacks including incongruous vided players and ad delivery systems, tracking and measurement discrepancies, and potential "frienemies" who threaten to cannibalize media consumption.

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