Keith Watanabe * NET 2.0

I've been doing this research project where I'm investigating the US online video market.  While I'm probably about 80% complete of checking out all these websites and whatnot, I came to the conclusion that there's just far too many "Me-Too" sites that add little value to the web.  Certainly, I'm also accountable for this but in my case part of this goes to learning about technologies. So it's partly personal for me rather than strictly business.

That said, online video is quite limited and I've not been impressed by most of the stuff out there.  Occasionally, there's a good idea or two, but most fall into a limited number of categories.  It's obvious that people are building things to get a piece of the pie (what's remaining at least after Google/YouTube's share), but I personally consider leftovers something like four month old food.  Without giving precise numbers, here's a quick summary of the types of websites just for video out there:

• Video Hosting
• Video Search
• Aggregation Sites (i.e. adding links into a database)
• Social Networking
• Chat
• Conferencing
• Slideshows
• Podcasts
• IPTV
• P2P
• Instructional/Howtos
• Wannabe American Idol sites
• Video Blogging/Personal Shows
• Mobile versions of these
• Video Advertisement
• Studio Sponsored sites
• Specialized Media players

If you examine these closely, there's not one except perhaps IPTV that you cannot do with YouTube.  And what's more amazing is the amount of money these sites receive.  Many of these sites might be funded from $2 million all the way up to $100+ million.  I'm honestly not certain why companies are willing to fund sites that are YouTube copies.  But I'm guessing that they're hoping on making some cash from a highly risky IPO.

What's more disturbing is how these sites make their money.  The forms of money that these sites can make their money off of are:

• Online advertisement (duh)
• One time fee
• Revenue sharing (with partners)
• Account basis

I probably reviewed over 100 sites now (credit: crunchbase.com).  The majority of the sites earn money through some form of online advertisement.  Usually, Google ads or maybe they partner up with some of these newly established video advertisement sites.  But most are banner ads or ads injected into their video.  I guess in some ways, it makes sense because inserted commercials have always been successful in terms of revenue generation.  I mean, for the most part you can't fast forward through a commercial (unless you TiVo or record it).  Video simply pacifies the audience in a submissive state so it's far more effective than banner ads.

That all said, the thing that bothered me the most was that most of these non-YouTube sites were going for extremely niche markets.  In a way, it makes sense because the saying goes, "Do one thing and do it well."  But there's so much duplicated work.  I mean, take the media players using Flash, for instance.  Some of these players are absolute crap.  For example, AOL Video or Veoh.  Heck, both of those are flagged as some form of spyware on my virus scanner.  Also, many of these companies are building their own networks, which means they have to deal with the cost of serving streaming media and dealing with high bandwidth cost as well as facing server redundancy issues. 

Unfortunately, I see online video as something where only players with big bucks can really compete in this space.  Data centers and homes really need to upgrade their infrastructure to handle some of these cases to hopefully reduce the cost and lag.

Along those lines, I came to an idea as a suggestion to Google (or other big companies who have this kind of infrastructure).  You really need to start opening up your media player and data moreso to allow people to customize the features.  My gut feeling is that the start ups (outside of Myspace, AOL, etc.) do so for two reasons: 1) the potential to make bank; 2) the interface needs improvement.  Well, perhaps as a business opportunity, Google can open up their data and interface to allow more developers from the outside to contribute, kinda like how Facebook and Myspace have opened up to allow developers to customize the look of people's pages.

My other gut feeling when it comes to the Big Players in their attempt to go online is that they're fearing a YouTube/Google dominated media market.  It's quite obvious now why Murdoch/News Corp bought out Myspace.  But I'm seeing a lot more partnerships between big media companies and these start ups.  For instance, Hulu, Veoh, AOL, Grouper/Crackle.  Disney too announced that they will purchase 20 online companies.  And the main reason for these trends is that these traditional big media companies are not internet savvy companies, have tons of red tape but need to react to the market sooner.

Still, with the recent mutterings of Yahoo going online with their own type of streaming video, my belief is that you have to improve the entire experience of video.  I think that everyone in the online space is simply replicating work, without improving what we can or the content of it.  I mean, why put instructional videos on a dedicated site?  Why have streaming video from it?  I hardly commented anything positive during my 100+ website review.  Perhaps the only one that was semi-cool was a website that had facial recognition. 

The social networking thing is fun and easy, but it's WAY overdone.  i don't see a point in trying to build another niche network.  Instead, people should start reutilizing APIs out there unless these sites are not capable of putting forth something that doesn't satisfy a need.  And honestly, I'm not seeing a lot of needs being satisfied through these redundant sites.