Datawatch: The colossal growth of online video

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Jasper Jackson, TheMediaBriefing Experts' Blog, Advertising, Broadcast

Your digital media business model has to include video if it's to be successful.

With every new set of usage and advertising stats it becomes harder and harder to argue with that statement. Today, figures from PwC (via IAB UK) show that online video ad spend in the UK rose 43 percent to £69.8 million in the first half of 2012, accounting for 12 per cent of online and mobile ad spend compared to nine percent in 2011.

And with deals that will shape the future of video being struck at MIPCOM in Cannes this week, we thought it might be good to give you the big picture on video's rise as a key consumer behaviour.

Huge growth

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Cisco's Visual Networking Initiative forecast from earlier this year highlights a swathe of interesting trends which will frame the environment those deals will be played out in over the next four years.

And if you think online video is huge now, just wait. It's going redefine what we think of as huge.

The amount of data consumed each month by online video will more than quadruple between 2011 and 2016, from 10,000 petabytes last year to more than 45,000 petabytes in 2016. To put that in context, one petabyte is a million gigabytes. The entire written works of mankind to date runs to 50 petabytes. By 2016 we'll have six million years of video every month crossing the internet every month.

And that isn't just down to more data usage overall, the share of data consumed by online video globally will rise from 51 percent to 55 percent by 2016.

In the UK, internet video currently accounts for half of all internet traffic but that is set to rise to 59 percent by 2016. There are also separate signs the ad markets are catching up with the growth in video.

Changing format mix

Mobile has been touted as the next big thing in video for years, but the 90 percent average growth rate Cisco is predicting between 2011 and 2016 would seem, in part, to justify this. Mobile video currently consumes the fifth largest amount of data across online video formats, but by 2016 it will have leapfroged all other formats except long-form to become the second-largest source of video data traffic.

The continuing dominance of long-form video online challenges the stereotype of web video being made up of small snippets of cute cats or "Charlie bit my finger" viral videos. However, short form video consumption is growing more quickly than long form, at a rate of 34 percent compared to 22 percent for long-form.

It looks like short YouTube clips are still going to be a big earner. That makes Base79's decision at Mipcom to launch four new YouTube channels seem like a better long-term game plan than Freemantle's decision to start repurposing YouTube content for traditional broadcasters.

Internet video streamed to TV and internet-connected personal video recorders will also be a big growth area, but while internet to TV (over-the-top or OTT) will become the third-largest contributor to online video traffic, internet PVRs will still be a pretty small market in 2016.

Western Europe will have its revenge on America

Cisco's predictions for growth by region unsurprisingly show Latin America and the Middle East and Africa as the really high growth regions, with as both are developing rapidly from a very, very low base.

More surprising is the prediction that consumption in Western Europe will grow far more rapidly than in North America, at an average rate of 37 percent between 2011 and 2016, compared to 20 percent for North America. That will put Western Europe in second place in terms of consumption, just behind current leader Asia Pacific, and well ahead of the US in third.

Image by thms.nl on Flickr via a Creative Commons licence.

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