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.