Has the tide turned for YouTube/Google? (ComScore says so but doesn’t scream it) The next phase of online video

Over the past year, I’ve kept my eye on ComScore’s monthly press releases of the Video Metrix service which outlines the market share of online videos. It’s been amazing to see Google (98% of its video traffic comprised of YouTube) steadily increase its market share for six months straight (see chart below where I aggregated the info from a few months of ComScore press releases). It seemed as though this juggernaut was defying a strong current internet trend – the deportalization of content. Whereas “traditional” traffic has been continually flying towards the ethers of the long-tail of sites, video content has been doing the opposite in consolidating around this one big player. And unlike the other recent emergent category of sites – social networks – the network effects of friending should be in theory weaker in this realm. It appears as though YouTube has been enjoying the a position reminisce of the early days of the internet in which consumers just first go to their choice portal destination looking for general entertainment/information, rather than a specific piece of content, and never leave. People think “online video” and head directly to YouTube. Period.


However, over the past two months, it appears as though the trend has shifted. According to ComScore, YouTube’s market share of total videos viewed has decreased notably. I am surprised that yesterday’s ComScore press release didn’t make mention of it. Maybe they’re treading more cautious after the debacle earlier this year about predicting slowed growth in Google’s paid clicks. Part of decrease in video market share explanation can be attributed to a stronger FIM/MySpace presence, but not entirely. Also, a joint venture of NBC and Fox featuring full-length broadcast TV programs, officially debuted in May with .7% share. But whatever the specifics explanation attributed this current month, I wonder if this will mark the beginning of the next phase of online video where the emergence of a broader spectrum of video sites begin to take meaningful share. Even if the data is only directionally correct, there’s a kernel of truth somewhere within.

I am not suggesting that the me-too UCG sites which YouTube has clearly already beaten will make a surprising comeback. It seems that battle is over… but will they win the war? Last week’s report by the Diffisuion Group, which suggested that while UCG accounts for 42% of streams but only 4% of revenue both now and for years to come, put a damper on how big a prize YouTube has triumphed in that space. Last Wednesday’s Wall Street Journal article about YouTube’s revenues further highlighted the challenges on the monetization side.

Meanwhile, I believe we’re entering a second phase of the online video space in which the discovery mechanisms for (semi-)professional content, coupled with the increase of professional content available online in a distributed fashion, will facilitate a willingness of users to venture beyond YouTube to consume video across the net. But it won’t happen overnight. Especially when I hear that the dirty little secret from many independent video producers which maintain their own destination sites is that an overwhelming number of their views come via YouTube and not on their own distribution. While Google’s universal search in theory should facilitate this transition, given that in this case Google owns the both content (YouTube) and the discovery mechanisms (Google search), their incentive to push the latter is in conflict with their other own interest. Herein lies the problem – how do you find good video without going to YouTube?

This open question has inhibited the shift in video consumption past its original portal through to the distributed net – where the rest of web content consumption occurs. Perhaps the results of the past two ComScore surveys have signaled a change in consumers habits in which they’re finding video content wherever they just happen to be surfing anyway. The best (or at least a better) discovery mechanism will come in time, perhaps via a startup which eclipses Google while it’s conflicted… but regardless, eventually measuring “video sites traffic” will be redundant given that video will proliferate to all corners of the web on a predominant number of pages. There’s a good chance we’ll look back at this summer then and point to it as when it all really began to happen. Last week’s announcement of VideoEgg’s new set of experimental video formats reminds us that we are still in the early days of this space, despite the fact that so much has happened thus far.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.