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Two major factors that have spurred the rapid growth of online video include the increasing availability of broadband Internet access and Web 2.0 technology that allows user interaction with and control of content.
Those, according to Metacafe CEO Erick Hachenburg, are the main reasons online video is outpacing traditional TV in the contest for viewers' eyeballs.
With 37 million unique monthly visitors, the online video network Metacafe is the second-largest online video site. Only YouTube has more monthly visitors.
Hungry for Video
Listen to the podcast. (21:59 minutes)
A few years ago, YouTube tapped into an emerging and voracious appetite for online video. Hachenburg and the market will continue to grow rapidly as more viewers trade TV time for online video.
Already, online video viewing has reached the popularity of online search, Hachenburg said. Despite such rapid growth, however, there are some key challenges facing the industry. They include freedom of speech issues, which will be important as a variety of content is created and uploaded to video sites; advertisers' fear of being associated with the wrong content, and the struggle to develop revenue streams.
Despite some mergers and acquisitions in the sector, Hachenburg thinks online video is only about midway in the narrowing of the competitive field for video sites.
Other trends include the following:
- The growth of online TV, where the old TV model is simply transferred to the online arena
- The explosion of short-form video content, which will be driven by innovative content producers
In the coming years, Hachenburg expects that a small handful of players will dominate online video as large video aggregators but will co-exist along with niche sites that draw much smaller numbers.
Here are some excerpts of the interview:
E-Commerce Times: Could you define what the industry looked like three to five years ago, and how it evolved to what it is today, and what it is today?
Erick Hachenburg: As you know, Metacafe is one of the largest video sites out there. In fact, we call ourselves the largest independent, because aside from YouTube, which is part of Google (Nasdaq: GOOG) now, we are the biggest online video player out there, but when you look back at the history, we all realize that YouTube tapped into a really new and big phenomenon, a very important phenomenon, in the Internet space.
I don't know if there's a property that has grown to be a top-five Internet property worldwide as quickly as YouTube has -- it grew faster than MySpace, I think it grew faster than Google in its day. It's really a remarkable phenomenon. I think it speaks as much to the voracious appetite for video and the power of video -- something we saw ... when television became the predominant form of media and will continue to do in this century, but with the distribution being on the Internet.
YouTube tapped into that and showed that this is something everybody loves, everybody engages in, with the added dimension that you the user can start creating as well as choosing what you want to watch, when you want to watch, how you want to watch.
ECT: What spurred the growth of Metacafe?
EH: There's a lot of talk about what does Web 2.0 mean, and of course everybody has their own definition. But what I think spurred it is really a couple of things. First, broadband and the pervasiveness of broadband -- the fact that broadband is available in 60 to 70 percent of households now, so video is possible to be distributed to everybody.
But Web 2.0 also brought interaction, meaning the consumer was given the power to upload what they wanted to upload, choose to see what they wanted to see -- but even to take that video, I'm sure you've heard the concept of the embedded player, which is not a very common term, but the embedded player, meaning that you're able to take a video that you watch on a site and bring it to your own site or your own Facebook or MySpace page and put it there so it feels like it's your own.
The idea that you're going to go to a station, a channel where you're going to watch something is not a metaphor that works on the Internet. You go to your own page, you go to a friend's page, you go to a page where an e-mail 
sends you. Web 2.0 enabled that. It's easy to watch, it's easy to upload, but most importantly, it's easy to take that video where you want to go -- and that changed the way media is being consumed.
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