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Summary:

Liz Gannes had an interesting post yesterday, in the wake of the Veoh bankruptcy announcement, with a great chart outlining the huge volume of funding that has flowed to video sites over the years and how that has panned out. As a document, the chart is […]

Liz Gannes had an interesting post yesterday, in the wake of the Veoh bankruptcy announcement, with a great chart outlining the huge volume of funding that has flowed to video sites over the years and how that has panned out. As a document, the chart is an excellent indictment of the irrational exuberance — and folly — that attended the monies plowed into a handful of video sites.

But you’d be mistaken if you conflated this with an indictment of the health of online video more generally.
For that, a much more accurate picture was provided through recent comScore data on video viewership online. First, the comScore data shows consumption of online video doubled from December 2008 to December 2009. Second, that most viewing of online video (52 percent) takes place in the “long tail” — sites outside the top 25 video destinations.

This corresponds to what we’ve seen at Vodpod (given the nature of our service and our data set, I think I can confidently say we have the most complete and intimate view of what’s happening with online video). Our members have now collected videos from over 13,000 different sites. What’s going on? As I’ve maintained for a long, long time, it’s not about “video sites” — it’s about web sites with video.

Video — and now video sharing — has become a standard feature of the web. Why this has happened is the result of a bunch of factors, some obvious and some not:

1. Pervasive broadband.

2. The ability to make more money with in-video advertising, and an explosion of new ad networks that focus just on in-video advertising.

3. The fact that it’s trivial to create and transcode video now with tools like FFMpeg.

4. Flash – most web sharing platforms (blogs, Facebook, Myspace, etc) are willing to accept Flash player object embeds, and the Flash player has made video advertising easier and more effective. These are important and critical points lost by all those folks engaging in Flash-bashing right now. And there isn’t a clear, obvious path — yet — to replicate a lot of this with HTML5.

5. Decreased (and decreasing) broadband and storage costs. It’s simply not that expensive to deliver video.

6. Growth of SaaS video hosts like Brightcove, Ooyala, and thePlatform that have enabled video hosting for thousands of sites.

7. The huge free distribution opportunity provided through video sharing, all enabled by the “embed code” construct unique to video which I’ve previously written about here.

While it’s sad to see a site like Veoh come to an end, I don’t think it’s particularly illustrative of any trend or a forecast of anything to come. The storm clouds I see, and worry about, include a more fractured video environment due to HTML5 and lack of uniform support by the browsers for a single, standardized video codec; Apple’s intransigence on Flash on the iPhone and iPad, with the result that most of the video available today on the web is and will continue to be broken on those devices; and the lack of any clear path technically, right now, to replicate what is done with Flash video for both advertising and video sharing.

Mark Hall is founder and CEO of Vodpod.

Disclosure: Vodpod is backed by True Ventures, a venture capital firm that is also an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

Related content on GigaOM Pro (subscription required): Not Your Grandfather’s Streaming Video Business

By Mark Hall

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  1. Absolutely agree that it’s about web sites with video — THAT is the big story here. Virtually any business with an online presence will feature video front and center in the next couple years, if they are not already doing it today. Why? The story goes beyond making more money via in-video advertising. The real story is that video is more compelling than mere words and pictures — it is more engaging. That means that businesses will be able to market better, showcase their products and services better, interact and engage with their customers and prospective customers better, and ultimately sell and drive revenues better and more.

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