Report: User-Gen to Only Ever Account for 4% of Video Revenue

13 Comments

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.

13 Comments

Jeremy Campbell

I agree it’s hard to define what is user generated, and what is professional or semi professional content. There are some clear cut examples but there is a blurry section right in the middle that’s the main problem.

Is user generated considered to be content that only has value to its creator’s close networks? Does it need to have a certain level of production and entertainment value to be considered premium content? Does a budget of $0-$100 mean it’s user generated, and professional content has significant production budgets?
These are just a few of the many questions that need to be answered.

There needs to be some solid research showing exactly what is considered to be user generated video content so that site publishers, creators, and advertisers know the rules and guidelines to this new and emerging game.

Liz Gannes

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

Eric Susch

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.

Tom Wilde

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.

Nakul

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.

David Mullings

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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