Online Video–A Money Sinkhole

The use of online video has gone beyond the borders of the extraordinary. According to a new study by comScore, 175 million people watched video online last month. Americans spent 5.2 billion “sessions” on video sites. A session could include one video, or 100. YouTube still dominates the online video universe. The site had 1.9 billion viewing sessions and the average time spent on the site per view last month was 260 minutes. There is no evidence that YouTube GOOG makes any money on its service. Industry analysts believe that the firm's revenue could be as high as $450 million which is not likely to cover more than the site's bandwidth, storage, and other costs related to operations. YouTube has struggled to convince marketers that it is more than just a place for amateurs to post grainy video. A look at YouTube shows that this impression is correct although some Hollywood studios and advertisers like Sprint S use YouTube to reach consumers. Most YouTube pages, though, have no marketing messages. It is extraordinary to consider that YouTube could have such impressive traffic and have nearly nothing to show for it.Yahoo! YHOO follows YouTube as a distant second in September viewership 54.4 million users. Behind Yahoo! is Facebook, which should threaten the portals. Not only are their users headed off to social networks along with their advertisers, but now people who watch video online have begun to use Facebook. Facebook is, in theory, the only online site that could post large growth because members can swap an ever-burgeoning number of video posts for their friends. Read the rest here.