User-generated video Web sites, dominated by heavyweights such as YouTube and MySpace, may be awash with millions of clips, but face big challenges turning traffic to cash, a London-based research firm said Monday.
Market research analyst Screen Digest predicts that although 44 billion video streams--55 percent of all video content consumed in the U.S.--will be created by 2010, the market will account for only 15 percent of total revenues.
User-generated video made up 47 percent of the total online video market in the U.S. last year, said Screen Digest.
Compounding the problem of making money from video streams is that many such sites do well in content that can be violent, rude and boring, not something big advertisers are drawn to. Another challenge is the time taken to experiment with new advertising formats and the threat of a Web site losing its user appeal when ads appear near personal videos.
"It is the nature of content itself. How do you monetize free content? That is the core debate," said Arash Amel, a Screen Digest analyst who wrote the report. "No one has found a way to make real money from the huge audiences who participate on these sites."
Amel said there were a number of indicators that suggested "2007 might be the leveler for 2006" despite the strong growth.