Who Benefits from Online-Video Boom?

While the online-video space is expected to grow more than 40% annually for the next three years (eMarketer), an AdAge article today reminds us that the boom isn’t “evenly distributed,” with two companies as the primary recipients of shifting advertising dollars.

The online-video market was about $1.8 billion last year, with half of that going to just two players: Hulu (about $300 million) and YouTube (about $600 million), according to Brian Wieser, an analyst at Pivotal Research Group. “While our figure remains ahead of the television industry, growth outside Hulu and YouTube seems to be far from exploding,” Mr. Wieser wrote in a recent research note.

Content publishers, the article observes, aren’t seeing their own properties benefit significantly from online-video spend. So they’re increasingly turning to YouTube, which is “advancing” content creators with large grants. Last week Google/YouTube announced plans to spend $200 million to bring more professional content to its Google Content Network.

What’s slowed down video significantly is the reluctance of content creators to build shows without confidence advertisers will follow:

Many publishers have a chicken-and-egg problem as they vie with these challenges: They’re unable or reluctant to sink big investments into video series until they know they can recoup their costs, but brands will be reluctant to move dollars out of TV until digital video has quality content and significant audiences.