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Online video viewing is set to reach a milestone next year according to eMarketer. Numbers released this week show that half of Americans will watch online video next year.

But there needs to be a categorical shift of viewers online if the web video hopes to make the kinds of revenue that are seen offline.

eMarketer's report,  Video Content: A Premium Opportunity, projects there will be 144 million online video viewers in the U.S. this year, growing to 188 million viewers in 2013. That's 31% growth in the next five years and an estimate that 85% of U.S. Internet users will be online video viewers by 2013.

But the online video business better hope that eMarketer's predictions are off. For starters, the company defines online video viewers as people who download or stream online video at least once a month. For video monetization to really take off, video viewing online has to become a habit, not a hobby.

In addition, if only 59% of the population is watching online video that isn't a big enough mass of viewers to tip ad dollars from TV online.

For starters, eMarketer found that 44% of Americans watched online video in 2008. But according to Nielsen, 99% of all video viewing is still happening in front of television sets. And while the total video ad market brings in $70 billion annualy, online video advertising is still just a drop in the bucket with less than $1 billion in revenues. 

While growing the online video viewing population by 3% every year over the next four years would be progress, a more welcoming scenario would involve a tipping point of mass users that makes the web the defacto platform for viewing video content.

Of course that's harder to predict than a general growth in the sector, but as professional and long form content shifts online, the core audience of television viewers is likely to move online in large groups rather than a slowly shifting trend.

Take for instance what has happened so far. The audience of Americans visiting online video sites has grown 339% since 2003, according to an April report by Nielsen. Time spent on such sites grew nearly 2,000% in the same time period.

Meanwhile, Hulu’s growth has been explosive, up 490% year over year, according to Nielsen Online. Can those numbers keep growing at such high rates? Yes, especially when you consider that the audience on video viewers online is such a smal segment of the total video viewing population.

It's large seismic changes, not a gradual trickling of viewers online, that will prove online video as a revenue source online. If the recent example of a site like Hulu is any predictor, the shift of premium content online will have more to do with changing audience preferences than simply word of mouth or slowly growing interest in the online arena. When the content is there and the viewing experience gets as seamless as television viewing, viewers will come. But we can't know when or if that will happen until deals for additional content access are made in the online space.

Meghan Keane

Published 4 August, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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Ambarish Mitra

Before Microsoft took over Yahoo search, Youtube was worlds second most popular search engine. Online video is becoming vital communication channel. Most TV channels have realised that and introduced free tv on demand programmes online.

BBC iplayer has had a phenomenal success.

Now Netflix will be showing popular tv programmes like lost and soon all video content will move to smartphones.

Bandwidth improvements is definitely encouraging this shift.

about 7 years ago

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