1. A report on Online Video Industry
Puneet Gupta (09BM8037)
Varun Bajpai (09BM8059)
VGSOM, IIT Kharagpur

2. Table of Contents
Introduction.................................................................................................................................................. 3
Online Video Industry ................................................................................................................................ 3
Video Sharing ......................................................................................................................................... 3
Intermediaries ......................................................................................................................................... 6
Video Search........................................................................................................................................... 6
Video eCommerce ................................................................................................................................. 7
Video Creation & Editing ....................................................................................................................... 9
P2P ........................................................................................................................................................... 9
Vlog-o-sphere ....................................................................................................................................... 10
Current Industry Facts and Figures ....................................................................................................... 11
The Future of Video Monetization ......................................................................................................... 16
Porter 5 Forces Analysis for Industry .................................................................................................... 21
SWOT analysis for Online TV Business ............................................................................................... 22
Closing Thoughts ..................................................................................................................................... 23
References ................................................................................................................................................ 24

3. Introduction
The success story of YouTube and particularly its popularity and potential reach has
fascinated a lot of web startups. The outburst of social networking sites like Facebook,
Orkut, LinkdIn, MySpace and there encapsulation of videos in the recent past is only an
indication of the needs online population. The report aims to look at the online video
industry at present and the potential it portrays for a successful business venture.
Online Video Industry
The present video industry can be categorized into following (Sokullu & MacManus):-
• Video Sharing
• Intermediaries
• Video Search
• Video eCommerce
• Video Editing & Creation
• P2P (Peer To Peer)
• Vlogosphere
Video Sharing
One of the most popular categories of online video industry has been Video Sharing
and it is synonymous with YouTube. Video sharing sites allow you to upload your videos
and share them with others. But even if you are not a content producer, you can watch

4. others movies. So this is a very consumer-oriented industry that has been popularized
via blog-based viral marketing.
YouTube outperformed its competitors and has become a clear winner in video sharing.
And Google didn't skip this opportunity in the online video space, as it took advantage of
YouTube's legal hassles and snapped the market leader for the relatively small sum of
$1.65B. Even though Google already had its own video sharing site, Google Video, this
acquisition showed Google's ambitions in the online video space.
Yahoo Video remains well behind Google Video and YouTube. Also Yahoo Video does
not support as many video formats as the others do. For example, you cannot upload
your videos directly from your mobile, because this format is not supported yet. Yahoo
is trying to increase Yahoo Video usage by making it a part of their other well
established properties. For instance, you can see Yahoo Video stories on their
homepage.

5. PhotoBucket, a crucial component of most social networking sites and the number one
photo sharing site, did not miss the big opportunity in online video space and has a
video component too.
MetaCafe - The Israel based company is estimated to be the second biggest player in
this space after YouTube. The company does not limit itself to its home country and has
big international ambitions. It was recently rumored to be acquired by Yahoo for $200M.
The company is backed by top tier VC companies like Benchmark Capital and Accel
Partners. MetaCafe does not have a time limitation like YouTube, and offers a rich
desktop client for easy uploading. Their unique revenue sharing program was a great
innovation in this space.
The site wants you to program your own channel with your favorite movies, music and
clips, then broadcast it from your web page, blog or MySpace. This is a well thought
through viral marketing tactic, but the site's traffic seems low at this time.

6. Intermediaries
To legally host your commercial videos on YouTube or MetaCafe, intermediary
companies need to be contracted. Their main duty is to connect publishers, video
creators and advertisers.
BrightCove connects video creators with web publishers. This is a huge company that
raised ~ $60M from investors including New York Times in their latest round of
financing. Their syndication marketplace consists of approx. 1319 channels.
SayMedia - Connecticut based company empowers the video publishing of big
consumers like TED events, Bebo, Hi5 and America Online. Raised $12M in Series C
from August Capital and Josh Kopelman's First Round Capital.
Video Search
After the acquisition of YouTube, Google now focuses its Google Video property on
video search. This is a smart strategy, because the Google brand largely means search.

7. YouTube was already the number one video sharing site and Google Video has
exclusive access to all YouTube and Google Video data - which makes Google Video
search much superior to others.
A successful video search service from AOL. AOL had this capability after acquiring the
successful startup Truveo in early 2006.
Blinkx differs itself from the crowd with its innovative interface, which shows a preview
of videos in the search results. They also get satisfactory results from a variety of sites.
TV Eyes is different, because it crawls not video sharing sites like YouTube - but real
TV channels.
Video eCommerce
Video eCommerce sites allow to legally stream the latest cinema movies and TV shows
from computer.

8. Guba was one of the first to enter this market, being founded in 1998. They are not only
a video eCommerce site, but have free offerings and also a video sharing component.
But video sharing on Guba is very small compared to video eCommerce. One of Guba's
co-founders left the company after the YouTube acquisition and said in an interview that
YouTube won the big prize - and there will be no more big prizes in the industry!
Amazon Unbox can be easily described as the iTunes of videos. Unbox allows you to
preview and buy a wide selection of TV shows and movies for very low prices, starting
from $1.99. The videos can be watched via an exclusive client app from Amazon.
MovieFlix offers videos in Real format. They offer 2 membership programs: free and
premium. Besides the freely accessible videos, you can pay a monthly fee of $7.99 and
access their 4000 titles - the quality is arguable though.

9. Video Creation & Editing
Instead of paying hundreds of dollars in license fees to edit your videos, the following
sites are generally known to be good companions to video editing/sharing sites.
This video editing site was acquired by Yahoo right after it got to its public beta status. It
is expected to be embedded into Yahoo Video. This will bring a clear editing advantage
to Yahoo over the others. Yahoo is currently far behind Google in the video space
overall, hence JumpCut may provide them the edge.
Mojiti is a China based company. It allows you to add notations to your videos. Mojiti is
also a video sharing site targeting the Chinese market.
P2P
Peer to peer is taking an important place in video sharing. Video sharing requires large
bandwidth, which is why the burn rate of these sites is very high and only the VC
backed ones survive. P2P is an answer to this problem, by spreading the bandwidth
weight to clients using this system. There have been some recent large investments in
companies working in this field.

10. BitTorrent, the Creators of the popular open source P2P file sharing protocol do not own
the protocol itself, but own one of the most popular clients and a search site. They
recently got $20M funding from top tier firms like Accel Partners and acquired another
popular bittorrent client µTorrent.
Previously known as Azureus are the creators of the Java based popular open source
bittorrent client. They recently closed a $12M Series B investment from RedPoint
Ventures and BV Capital.
Vlog-o-sphere
Blogs and photologs have already taken over many people’s lives - being an excellent
way to share, communicate and self-express. And now with the commodization of digital
cameras, comes the vlogs - a.k.a. video blogs.. They are either for fun or self
expression, but a big industry can blossom here - there are a lot of opportunities.
Tomorrow’s vlogs, for example, are candidates to replace your favorite daily TV shows.

11. And popular vlogs don't just attract ads, but they also hold the potential to sign
partnership deals with video sharing sites. Examples:
Rocketboom is the best example of how far vlogs can go. This vlog is dedicated to
reporting the latest developments in internet culture, in an original and entertaining way.
It looks so professional that you may not able to differentiate it from TV shows you
watch.
References: Emre Sokullu and Richard MacManus for their source article, & the research of Ali Dagli of
Savvian
Current Industry Facts and Figures
Among the online population:-
• 1 in 3 video viewers comment
• 2 in 5 upload videos
• 1 in 2 regularly share videos
• More than 1 in 2 view online video with others
• Among 18-34’s, more than 2 in 3 view with others

12. Total Unique Viewers (000)
160,000
140,000
120,000
100,000
80,000
60,000
Total Unique Viewers (000)
40,000
20,000
0
Google leads the race in this sector with more than 145 million unique visitors followed
by Yahoo and others. This data shows US population.

13. As clearly seen, Indian online population still lags behind the other major countries in
online video streaming. But still a considerate number do and its rapidly increasing.
Per month stats for online video in India as compared to USA is:-
USA India
Number of Viewers 180M 30M
% of Internet Audience 85% 71%
Videos Viewed 36B 1.7B
Videos per person 200 58
Viewing time per person 13 Hr 5

14. The data clearly shows approx similar % of internet audience in India watch videos
online but the viewing time per person and the number of videos viewed is
comparatively less. This may clearly be seen as a growth opportunity in India.
The data clearly shows Google to be a leader in viewer’s time in India too. But a major
shift can be seen in the presence of social networking sites like Facebook.

15. The top 4 surfed video categories viewed in India are represented by the data above.
The Entertainment Industry dominates this due the large influence of TV soaps and
Bollywood in this part of the world. The multimedia category includes
homemade/educational videos and cartoons. The conversational media includes
chatting and all.
If we look at the audience profile in US, we’ll see that the average number of videos
viewed by unique visitors peaks in the age group 15-24 in males whereas it peaks in the
age group 35-44 in case of females. Also more males tend to view the videos than there
fairer counterparts.

16. The Future of Video Monetization
The video viewing duration is moving upwards as TV content moves online.

17. 2006 2010
Ad Spent $324 M $1440 M
Videos 63 B 441 B
Spent Per Video 0.7 cents 0.4 cents
The above data shows the ad spent in US in this industry.This means that the ad spent
in increased only by 344% wherease the videos increased by 600%. This shows the
tremendous growth that this industry promises.
The projection also shows that the online video viewing growth is outpacing ad
spending growth.
Now let us compare the advertisements, the major source of revenue generations on
online video portals as compared to TV.

19. The data clearly indicates that the ad time in normal online videos or long form premium
TV content is minimal as compared to that on TV presently. Hence a huge potential
market lies ahead to be tapped.
A simple survey of what viewers really value watching online shed some light on the
potential services to venture into:-
More than half the viewers were interested in watching past/ missed episodes online.
Also a sizeable population watched online because it has less ads. Hence we propose
entering into Online TV Business. As the lifestyle of people is changing, it becomes
increasingly difficult for them to fix a time to watch their favorite episodes. But today, if
we provide an opportunity to them to watch whatever they want at whatever time they

20. want, in high quality, with fewer ads than TV, and at a fair price it would create a win-win
situation for all. But the real challenge remains – MONEY.
Who should be our target segment? Will they be willing to pay?
Studies indicate that nearly 100% of online spenders are video viewers. Hence can be
our initial customers and with the improvement in the broadband speeds and
decreasing rates, this industry can be to Television industry what Wikipedia was to
Encyclopedias.
In the end we close our report by presenting Porter’s 5 forces analysis of the Industry
and the SWOT analysis for Online TV Business.

21. Porter 5 Forces Analysis for Industry
 Bargaining power of customers – High
 Many alternative websites available
 Switching Cost is low
 Bargaining power of suppliers – Marginal
 Suppliers of videos are often common internet users
 The only bargain can be the amount of web space provided to upload the
video
 Threat of new entrants – High
 Limited amount of capital required
 Services can be easily copied
 Scope for innovation like faster download
 Threats of substitutes – Medium
 Social media sites providing comprehensive services, hence eating the share
 Highly dynamic industry
 Competitive Rivalry in industry – High
 Many big firms trying to capture this lucrative market
 New innovative products on offer

22. SWOT analysis for Online TV Business
• Huge untapped market in • Requires high bandwidth
India for streaming
• TV shows want to increase • Requires detailed contracts
their viewership with content partners
• Control over postings • Willingness to pay for
online content which might
be freely available
Strength Weakness
• Rapid increasing viewer’s base • Customer loyalty towards TV
• Reducing cost of the required shows and not
infrastructure websites, hence a huge threat
• Changing lifestyle of of other players copying
people, hence no fixed time to similar business model
watch TV • Piracy concerns
Opportunity Threats

23. Closing Thoughts
 Consumers are viewing online video for convenience benefits
 Viewing of originally-scripted content on viewers’ own schedule is the key
driver of online viewer behavior
 Much of the online viewing of video represents an incremental audience
for originally scripted content because it includes viewers who may have
missed the live airing
 Online viewing represents a significant additional revenue stream to
content owners
 Time spent viewing online video and video ad dollars are currently a small
fraction of TV
 There is no decline in time spent watching TV nor in TV ad spending
 TV ad effectiveness shows no decline over past decade
 The ad load for online video is low relative to TV and could be increased
 Avoids content owners nightmare of fast forwarding of ads
 Online video represents a compelling opportunity for the digital channel to
capture a meaningful share of branding dollars
 Online video ad campaigns overlaid on TV can increase effective reach
while not increasing cost

24. References
 www.shimshockgroup.com
 www.comscore.com
 www.jasonbergman.me
 www.mappingtheweb.com
 www.ecommerceangles.com