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Summary:

User-generated video growth is set to tail off, despite being a relatively new phenomenon, according to a new report from British market research firm Screen Digest. At the end of 2006, user-generated videos made up 47 percent of the U.S. online video market (updated) of 12.5 […]

User-generated video growth is set to tail off, despite being a relatively new phenomenon, according to a new report from British market research firm Screen Digest. At the end of 2006, user-generated videos made up 47 percent of the U.S. online video market (updated) of 12.5 billion total video streams, says the firm. By 2010, that figure will climb to just 55 percent of the 44 billion video streams expected to be consumed in the U.S. that year.

At the same time, online video revenue is expected to grow to $900 million by 2010 from $200 million in 2006. User-generated video, mostly supported by advertising, is expected to account for just 15 percent of this revenue. That’s a pretty conservative estimate, but it makes sense given the increasing availability of professional content online.

Says the report,

Site owners and advertising agencies could struggle to find a cost-effective way to plan and place relevant advertising on millions of different videos. Whilst they are experiencing a period of trial and error searching for the right advertising formats, the sites risk losing their ‘cool’ factor as users are turned off by finding mainstream advertising on their personal videos.

Sorry for the spotty data (e.g. no number for total number of video streams in 2006, no definition of “user-generated content”); we are using a press release found after seeing a mention on the Splashcast blog. We’ve put in a request with the firm to get more detail.

Update: Screen Digest sent us an executive summary of the report that answers our key question about a comparable estimate for the number of online video streams in the U.S. in 2005. It is 12.5 billion (again, forecast to reach 44 billion by 2010). So that’s a ton of growth predicted on all online video fronts, but still flattening growth on the part of user-generated video as compared to other video.

  1. Thanks for the link. I’ll admit I hadn’t even thought of looking at it the way you did here. Monetization will be a challenge for sure, but I know I’m of the belief that total video online will grow a whole lot. That user generated video is expected by these analysts to make up the majority of what’s watched still seems quite remarkable to me. Good point though re slowed growth in market share

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  2. You’re right, user-generated accounting for the majority of video streams is worth noting. And it would be near impossible to match the huge gains UGC has made in the last year or two.

    If I can get media access to the full report I will try to pick out excerpts that help us make more informed conclusions.

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  3. Liz

    All trends follow an S curve, and that UGM is another such is no surprise, though calling it this early surprises me a bit – will have to see the reasoning behind their work.

    A likely solution will be to repurpose fairly standard digital video ads slightly depending on the intended audience. Non trivial, but far from impossible either.

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  4. User Generated Online Moving Pictures – the End is Nigh?…

    Screen Digest today have floated a report claiming that video generated media will have extremely low relative growth from now on – moving from 47% to 55% of US online video by 2010 for example – and be only 15% of the revenues, mainly from advertising…

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  5. Liz,
    Have you compared Screen Digest’s numbers against anyone else? This is the first quote I’ve found on UGC % of streams. BUT, the total streams is way off from Yankee group’s. In August they put ’05 at 18B and ’10 at 84B. I’m wondering, do I have the definition of a video stream confused? Or are they really that far off?

    Interested in your thoughts.

    Holly

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  6. [...] on this project, vDemo.tv will be launching a private Alpha. The idea stems from the fact that user generated videos has a stronger inpact on viewers, with more niche online communities being [...]

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  7. [...] about users and/or non-professionals getting a piece of the action. Screen Digest, which hasn’t been particularly enthusiastic about video revenues in general, thinks user-generated video will be [...]

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  8. J’ai entendu parler du mouvement flattening, apperement cela vient des Etats-Unis, est-ce que quelqu’un sait quelque chose à ce sujet?

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  9. Apparemment un livre a été publié sur le mouvement flattening ( aplatissement) et sortira bientot en France. J ai envie de le livre pour en savoir plus, est ce que vous en avez entendu parler?

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