Analyst Speak -Online video is here and it's huge

23 August 2007

On 25 May, 7.7m people in the UK tuned in to watch Doctor Who on BBC One. On the same day, 9.8m people in the UK visited a website owned by Google, of which 2.2m watched at least one video on YouTube.

Rewind one year to 27 May 2006. Doctor Who was watched by 6.8m people, so the 2007 audience represents a year-on-year increase of 14%. YouTube's audience over that same period grew by a whopping 969%, from 206,000 unique visitors to 2.2m.

So is online video the future of the internet? No, it's the present. ComScore tracks all streaming activity on the web and found that in May this year 83% of the UK's online population initiated a stream. This activity accounted for 11% of the total time spent online.

A greater proportion of UK web users stream content than their counterparts in France (80%), the US (75%) and Germany (71%). And each individual viewer streams more. The average video streamer in the UK initiated 87 streams in May, versus72 in France, 63 in the US and 70 in Germany.

The big question facing online video companies is how to monetise this content. Advertising is one option - pre-roll or content-relevant ads appear beside a clip while it plays. Alternatively there are subscription models. Apple iTunes has a one-off purchase policy that enables full-length shows and films to be bought ad-free, while premiumtv.co.uk provides users with access to paid-for content on various sport and entertainment sites.

It'll be interesting to see how these revenue models evolve over time. My guess is that ad-based models will deliver the most revenue in the long run, although it must be remembered that content is king and whoever provides the most captivating content will secure the largest audience.

It's worth noting that Ofcom's Market Impact Assessment of the BBC iPlayer included the comment that the "video services proposed by the BBC could account for around 3bn viewing hours a year by 2011". That's a figure that will make the BBC happy, and it may even be a conservative estimate. We calculate that time spent online jumped 30% between May 2006 and May 2007, and don't see any signs of that growth slowing.

Bob Ivins is executive VP of international markets at ComScore

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