05.18.2009 12:05 PM
Online: Magna Predicts 32 Percent Hike in Web Video Market for 2009

NEW YORK: Online video Web sites will outpace other media platforms for revenues this year, according to research from the folks at Magna Insight. Analysts at the firm say online video revenues will grow 32 percent this year, from $531 million to $699 million.

“While these figures represent downward revisions from our forecast for the sector in the middle of last year--prior to the subsequent escalation of the recession--these gains will likely outpace growth rates for most other emerging media platforms,” the Magna folks wrote in their online video forecast as of April 2009.

Increased inventory is one of the drivers. Most online video used to be user-generated. Now, broadcast and network cable fare is all over the Internet. Broadband penetration is another factor. Broadband now covers 60 percent of U.S. homes and spawned a 24 percent increase in the amount of professionally produced online video that was posted during 2008 in terms of time, following a 50 percent increase between 2007 and 2008.

“Still, this represents a limited volume of top-tier inventory,” Magna said. “Few large advertisers can achieve broad reaching objectives solely by using an online video-only campaign if there are any content preferences involved.”

For example, during 2008, 490 billion “person-hours” of traditional TV content was consumed, Magna said, citing Nielsen. The total is around 244 times the amount of video consumed online.

“Even assuming last year’s growth rate continues through 2012, traditional TV would still account for 98 times more consumption,” the firm said. “Over the next few years, we expect traditional TV content--and traditional TV suppliers--will continue to account for the bulk of online video budgets, but as user-generated content sites increasingly supply professional content to their mass audiences, these sites will produce faster rates of growth.”

Magna predicts that by 2011, online video will generate more than $1 billion in revenues, an annual compound growth rate of 36 percent over a five-year period. – Deborah D. McAdams

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