Back in April Mike Arrington of TechCrunch opined that online video sites were “breeding like rabbits.” By the end of the year we had the huge $1.5 billion acquisition of YouTube by Google. Can anyone deny that 2006 was the year that online video came of age?

We’ve also saw the rise of sites like Blip.tv, Revver, Guba, MySpace Video, Eyespot, MetaCafe, Brightcove and let’s not forget Google Video. So what do all these sites have in common besides the fact that they’re probably all operating in the red? None of these sites charge users for storage space or bandwidth. In fact, some like Revver and MetaCafe even pay users based on the number of views received by their videos.

Storing and reliably delivering video content costs money. And those costs increase exponentially when you have open communities where just about anyone can upload anything at anytime. Open is good, but you need limits. And you also need revenue in order for a business (these sites are businesses right?) to survive. I know, they’ll make it up with advertising. Sounds like a bubble to me.

So I figured that I might as well throw in my own predictions on where the online video community space will head in 2007.

I remember the tech bubble of the late 90s and at that time a lot of things did not make sense to me. I have the same feeling about all of these online video communities. The numbers just don’t add up.

Prediction #1: Some of the players mentioned above will not exist by the end of 2007. They will either go away as a result of consolidation or outright collapse. I’m sure that a couple of existing sites that I don’t mention will also go away as well.

Prediction #2: New players will emerge into the space with new money and new ideas.

Prediction #3: Google will make a strategic decision to change the model of YouTube either by charging to upload content or collapsing YouTube into Google Video.

Prediction #4: Major brands will move away from using the free video services (mainly YouTube frankly) in favor of paid services that allow them to control delivery, statistics and the community surrounding their content.

I have a couple of strong reasons for these predictions. The first reason is that I think many of the smaller players (which means everyone but Google or MySpace) will feel great financial pressure in the coming year. Don’t expect VCs to pour wads of cash into companies that they know can’t be acquired for eight figure sums. In short, YouTube won the big prize already.

My second reason involves the fact that these communities can easily deteriorate as the content pool becomes polluted by advertisements, pseudo porn and self serving advertistments. Mark Cuban rips GooTube based on the fact that most of the top content are commercials in one form or another. Since when do commercials add up to quality entertainment?

Craigslist learned that one way they could improve the quality of broker listed apartment ads in the New York City area was to start charging a small amount ($10) for each listing. By doing so they gained a source of revenue and greatly reduced the amount of useless and repeat listings on their site. I think that a flat fee for uploading videos on all of these sites would strengthen their bottom lines and increase the quality of the content in the communities.

The real issue for businesses and brands is the fact that their content might just show up adjacent to pseudo porn or some other commercial that conflicts with their message. Segregating the content to a separate part of the site doesn’t work since users are less likely to go there.

Why should organizations deal with the hassle? Larger businesses and brands will start building their own content communities, possibly driven by the engines of some of the services mentioned above. Smaller players and individual producers should get smart and start paying for media hosting. They should still selectively take part in other communities, but having paid hosting will insure that their video can be delivered in the event of a sale, merger or collapse of one of the free services.

Happy New Year!

[tags]Social Media, Video, Predictions, 2007, Predictions 2007[/tags]