Surge in online video viewing good news for a host of startups

The latest figures on Web video viewing show just how many consumers have glommed on to the Internet as a regular source of news and entertainment.

A report from the Pew Internet and American Life Project released this week shows that the percentage of Internet users who went to a video-sharing site grew 45% during 2007, rising from one-third to almost one-half ofWeb surfers.

And Web video is expanding not only its reach but its frequency of use, with the percentage of Pew survey respondents who said they watched a video "yesterday" (i.e, the day before they were contacted) also nearly doubled, to 15% from 8%.

While it's still early in the game, this is a new medium being created before our eyes.

As we've written before on Vator.tv here and here, this new medium presents a tremendous opportunity to producers and distributors of independent Web video content, as well as to new-media search and advertising startups.

You can find several episodes of Vator Reports devoted to these nascent industries. 

Certainly, there are hurdles to be overcome. One of the most important is the lack of standards among online ad networks for what constitutes a viewed page or impression. The current mish-mash of ways that advertisers are billed for video ad impressions (did the user click on it, or view part of it, or all of it?) is holding back many would-be advertisers. (Look for more on that story later this month on Vator.tv.)

The formats of the ads themselves are evolving, with the pre-roll the ad of choice right now, because of  its relatively high click-through rate. Another question is how revenue will be shared between content creators and distribution platforms. 

Still, once these things are worked out, and content creators or distributors build a big enough audience, advertising dollars will flow into the new medium, just as they did to cable channels and niche-focused magazines. It's narrowcasting 2.0.

What's interesting about the Pew report numbers is that Web-video viewing is highest among those from affluent households, with 60% of those earning $75,000 a year or more watching online videos, compared to 41% for those from households earning less than $50,000 annually.

That may be more evidence of a so-called digital divide which sees lower-income families not having access to broadband connections. 

But combined with the sophisticated targeting and measuring characteristics of online advertising, it also suggests that Web video ads ultimately may support higher CPM rates than text-based ones.

Another key finding from the Pew report supports that thesis. Web video viewing is highest -- at 70% of all Web users -- among those aged 18-29. While those youngsters tend to not be as wealthy as older Americans, they are prize by marketers for their free-spending, trend-setting ways. 

We have a large number of video pitches on Vator.tv from online video companies, and as that number grows, we will be featuring more of them in the newsroom. 

One of the most polished comes from Nimble TV, which is providing a search-and-discovery platform moderated by users. To check out their pitch, click the video link embedded in this story.