Here is the stark reality of online video: nobody is making much money and the enthusiastic projections for online video advertising going from $500 million in 2008 to more than $5 billion in five years will undoubtedly be pared back in the coming weeks as analysts revisit their numbers. (Those numbers are from August—eMarketer).
The writing is already on the wall. YouTube is resorting to selling off video search results to the sexiest bidder and just today announced that it is extending overlay ads in YouTube Partner videos to embedded videos on other sites (previously these would only show up on YouTube itself). It is pulling out all the stops to try to get those revenues flowing. Meanwhile, smaller video startups such as Veoh and Revsion3 have already cut back on staff and shows in order to survive. So you can throw this slide out the window:
There is plenty of video inventory, just not a lot that advertisers want. Although YouTube streams more than 5 billion videos a month, estimates bandied about are that only 3 to 4 percent of those videos have ads. That is still a lot of videos, but it means that much smaller competitors such as Hulu that focus only on professionally-produced, advertiser-friendly videos are much closer in revenues to YouTube than the raw number of video streams would suggest.