Online Video Consumption Up, No One Making Money (GOOG)(VIA)(NWS)(MSFT)(YHOO)

May 12, 2008 by Douglas A. McIntyre

Online videos viewed in March moved up to 11.5 billion, a 13% jump from the year before and a tremendous pop of 64% over the same month last year.

The question is whether anyone is making money from all that traffic. The answer is probably “no”. The management of Google (GOOG) recently said they are working on ways to get substantial revenue from their YouTube site, the most visited video destination on the web. But, they have not gotten there yet.

In March, almost 4.4 billion videos were accessed at YouTube. Fox sites, owned by News Corp (NWS), were a distant second with 477 million views. They were followed by Yahoo! (YHOO), at 328 million, Viacom (VIA) at 249 million, and Microsoft (MSFT) at 225 million.

A canvass of most of these sites shows very little in the way for video advertising. YouTube is a mish-mash of content which looks more like a social network than a premium video site. Because most of the content is generated by users and is of poor quality, it is not likely to be attractive to marketers.

Online video is expensive for the companies that offer it, due to storage of files and the bandwidth required to move it from place to place.

The growth in impressive, but it is unlikely that any of the companies near the top of the list for video audiences is making a dime.

Douglas A. McIntyre