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Summary:

User-generated video will account for 42 percent of streams this year, but only 4 percent of online video revenue, according to an upcoming study from The Diffusion Group. Conversely, professional online video will account for 58 percent of streams and 96 percent of revenue. Those trends […]

User-generated video will account for 42 percent of streams this year, but only 4 percent of online video revenue, according to an upcoming study from The Diffusion Group. Conversely, professional online video will account for 58 percent of streams and 96 percent of revenue. Those trends are expected to hold for the next five years.

The proportions are more skewed than we would have thought, but they’re borne out (at least in the present day) by the actions of video sites; for instance, YouTube considering resorting to pre-roll and post-roll advertising to eke more revenue out of its partner videos. The site’s partner videos come from both pros and popular amateurs, and reportedly only account for 4 percent of its total videos (but a larger portion of total views).

TDG determined that the best way to make money from user-generated video is as an advertisement for professional video that can generate revenue.

We don’t know much about the methodology behind the report (or even what region it covers), but we’ll update when we learn more.

Update: We spoke with TDG’s Mugs Buckley, the lead analyst on the report, who clarified that it applied to the U.S. only. She said when she’s talking about revenue here it’s only that from video advertising — so pre-rolls, post-rolls, overlays — not associated banner ads or anything else.

Buckley added that her definition of “professional content” includes things like TMZ and Revision3.

And lastly, she explained that the two pie charts aren’t for same data set — something I was definitely confused about. The one on the left includes “other,” which means porn, subscription content, pay-per-view, corporate video, etc. — anything that’s not your average ad-supported video. The right pie chart excludes this category, and only compares ad-supported UGC and ad-supported professional video.

  1. I don’t think anyone would say UGC revenue will be fixed at 4% but no one should be surprised. The advertisers have been very loud and clear that they cannot find enough quality content to advertise alongside when it comes to UGC video.

    UGC is still in it’s infancy and just like how the quality improves over time for any market, there is a long road ahead.

    I admit, my venture focuses on professional content and semi-professional UGC content because I need to earn revenue ASAP, not burn my money.

    (I am CEO of Realvibez.tv)

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  2. [...] old king, Content, seems to get another boost from an upcoming study by The Diffusion Group. As reported by NewTeeVee… “User-generated video will account for 42 percent of streams this year, but only 4 percent of [...]

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  3. Great post, Liz. First time I’ve seen this kind of breakdown. Any chance you’ll post the entire study?

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  4. Do you know if these stats (42 vs 58%) measure the streams in absolute terms or in viewing time? When YouTube says 96% of its videos are UGC, i’m a bit surprised at how this report pegs the professional content at such a high proportion.

    I’m curious to know projections on how total hours viewed shifts towards professional content as more of it comes online. Presumably ad effectiveness is much higher when related to prof content so ad $/hr viewed is much higher as well.

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  5. This is the reality of UGC. UGC will ultimately become what instant messaging is. A ubiquitous portal-like utility that everyone uses, but no one makes any money from.

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  6. The big question is how is “User Generated” and “Professional Content” defined? Is it defined by quality?.. how big a corporation made the video? Can these two things even be separated?

    For example, I consider our show at LetsKnit2gether.com to be professional content because it’s high quality and we intend it as a business. But we’re a very small company and CAT (our host) is actually a knitter and not an actor.

    On the other side of it, what about the videos made by big ad agencies that are promotion or ads themselves that are shot to look like UGC? Which category do they fall in?

    I think there’s too much gray area in online video to separate it into these specific categories. I’m looking forward to the complete report to see what it actually says.

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  7. Thanks for the excellent comments. If you have any more questions for TDG, let me know, as I’m talking to them later today.

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  8. [...] Report: User-Gen to Only Ever Account for 4% of Video Revenue NEWTEEVEE User-generated video will account for 42 percent of streams this year, but only 4 percent of online video revenue, according to an upcoming study from The Diffusion Group. Conversely, professional online video will account for 58 percent of streams and 96 percent of revenue. Those trends are expected to hold for the next five years. Source> [...]

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  9. [...] From the Diffusion Group, via NewTeeVee. [...]

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  10. [...] research on user-generated content shows that User-generated video will account for 42% of streams this year, but only 4 percent of online video revenue, according to an upcoming study from The Diffusion [...]

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