If you're interested in getting a good sense on the size of the online video advertising market, you'd probably just look at one of the many analyst reports that give numbers on the growth in the industry. The problem is that looking at these reports gives you such a wide range of data, that it's nearly impossible to find two analysts who agree on similar numbers. I did a quick look up of some of the recent reports and found the following:

• In Dec of 08', Forrester Research said that the global online video advertising market will reach $7.2B by 2012. (source)

• In June of 08', eMarketer said the global online video advertising
  market would be $7.8B by 2012, $3B of which would come from the U.S.
  alone. (source) Then in August of 08', eMarketer cut that predicition down to $1B from the U.S. by 2012.

• In May of 08', IDC said that online video advertising will reach $3.8B by 2012. (source) But in April of 09', said the same market size will be $600M by 2012. (source)

• In June of 08', the Kelsey Group said that revenue just from local online video advertising alone would be $1.5B by 2012. (source)

• In Feb of 07', Borrell Associates predicts that the local online video advertising market will be $5B in 2012. (source)

• In Sept of 08', LiveRail said the online video advertising makret would be $1.3B in 2010. (source)

• In Aug of 08', Lehman brothers said the online video advertising market would reach $2.4B by 2012. (source)

• In Feb of 08', Parks Associates said the online video advertising market will be $6.6B in 2012. (source)

Clearly, no one seems to agree on the size of the market and the numbers have huge ranges. Compounding this problem is the fact that many of these reports don't outline exactly what they consider to be online video advertising revenue. Is it just ads played in the video, or also ads around the video?

I don't know what the size of the online video advertising market is and I've never tried to figure it out. But it's pretty hard for a niche industry like online video advertising to try and show everyone the growth taking place when the numbers being projected have a difference in the billions.

What I'd really like to know is what figure do the online video advertising vendors use in their slide deck when they are telling their investors the size of the market and the expected growth.

In the last few days weeks, Move Networks has removed the names and bios of all of their executives from their website. While they still list the board of directors, clearly some changes are coming and we'll hear about some new executive appointments very shortly.

Updated: Some executive positions have already been filled and will be announced after NAB. This does not yet include a new CEO and John Edwards will still be speaking in three weeks at the Streaming Media East show, still representing Move Networks as their CEO on a panel I am moderating entitled "Live Broadcasts And HD Video: Can Web Video Ever Scale To TV-Sized Audiences?"

The speaker lineup continues to grow for next month's Content Delivery Summit, on Monday May 11th, the day before the Streaming Media East show. We've got nearly every telco and major CDN represented along with a lot of great end-user CDN customers. Readers of my blog can register at a special discount rate of $395 at this link. I will be highlighting some of the sessions leading up to the event and this telco panel with Deutsche Telekom, Level 3, Global Crossing and Tata Communications is sure to be interesting:

The CDN Market Grows Up: Here Come The Telcos (11:30  a.m. – 12:30p.m.)
In the past twelve months we've seen additional telcos like Deutsche Telekom, TeliaSonera, Pacnet and others enter the CDN market. What used to be a service only offered by pure-play CDNs is now starting to see a serious push by the major carriers with varying CDN strategies. But with the size of the video delivery market still small, what's in it for them? Can they truly achieve cost savings and pass them along to customers if they own the network? Can they focus enough to understand what it takes to run a CDN that does more than just push bits? Hear answers to these questions directly from the carriers and learn whether or not they plan to acquire smaller CDN players to speed their time to market.

• Moderator: Dan Rayburn, Executive Vice President, StreamingMedia.com
• Panelist: Andres Jordan, VP, Innovation, Deutsche Telekom North America
• Panelist: Lisa Guillaume, VP, CDN Services, Content Markets, Level 3
• Panelist: Al DiGabriele, VP, Marketing, Global Crossing
• Panelist: Giles Sigouin, Senior Project Manager, IP, Content Delivery Services, Tata Communications

If you have a question you want me to ask one of the companies, put it in the comments section below.

For some time now I have been writing that Level 3 is doing a good job in the CDN market closing deals and ramping up revenue, doing almost $50M last year for all CDN services. Various people always ask me why they don't see many press releases from Level 3 talking about customer wins and many ask me who exactly is using Level 3 for their CDN services?

It's a valid question and many times, the vendor does not have permission to use the customers name in a press release. That said, Level 3 does have permission from some customers to use their name in presentations and I have located other customers via trace routes. Some of Level 3's CDN customers are Netflix, FOX, Yahoo!, Microsoft, Comcast, Sky, NHL, BBC, DNC, CNN and others. How many customers Level 3 has in total for their CDN service I do not know, but I expect that as Level 3's CDN business continues to grow, their will start to give out more details on that segment of their business during their IR calls.

Based on the growth Level 3 has seen for their CDN business so far, I expect them to generate close to $100M from their CDN group for 2009.

This morning, Adobe announced that they are working to bring the Flash Platform to the living room via broadband enabled TVs, set-top boxes and other devices and are already working with multiple content, OEM and System on Chips (SoC) vendors to make this happen. While I don't blame Adobe for wanting to get Flash on as many devices and platforms as possible, the reality is that this won't be a game changer or have much impact.

This isn't a knock on Adobe, they are being smart and trying to extend the Flash Platform to as many places as possible. But Flash was never built for video, let alone for operating outside the PC environment. That's not to say that it can't work on other devices, but I see quite a few hurdles in their way keeping this from being successful.

Lets start with the broadband enabled TV route. The average consumer holds on to their TV for twelve years, a stat Netflix recently provided on one of their IR calls. I don't know if that is true or not, but even Adobe's blog says the average is at least six years. While there are over fifty broadband enabled TVs models that will be coming out in the second half of this year, realistically how many are going to be sold in the first three years? The numbers won't be big. Even set-top boxes don't get replaced every few years and the cable company never goes door to door replacing equipment. Until I got TiVo with cable cards and dumped my cable box, my set-top box had not been replaced in six years.

Putting all that aside, how well will Flash work on the TV in terms of performance? For starters, when it specifically comes to HD video quality, Flash is not exactly leading in that department. Trying to get HD videos to play on my MacBook from their showcase website is a poor experience, with my six month old MacBook not being able to handle the processing power that's needed. Yes, it works for 480p content, but only Adobe classifies 480p as "HD" on the web, no one else does. How much processing power will the TV or set-top box need to have even with the "optimized implementation of Flash technology" that Adobe is working on? Flash video is a resource intensive beast and unless Flash Lite is much better, I think the performance is going to be a big issue. I want to see this working at 1080p on a 50" TV set without someone needing to have a 10MB connection.

While Adobe did announce this with the support of a bunch of major content owners, none of them said exactly what they are supporting. Will it be text and widgets, or specific video apps? If we're talking widgets, like the kind that Yahoo! has been working on, great, but that's not video. I remember when Adobe announced the Adobe Media Player for the desktop with a bunch of content partners, which sounded great, but has gotten almost no traction. Having content owners mentioned in the release does not guarantee adoption or success.

Many in the industry point to a recently released Parks Associates white paper as proof that broadband households want widgets and web video on their TV. The report says that "almost 50% of [broadband households] are interested in premium Web content, including TV shows and movies, through a connected set-top box."
Great. But simply being "interested" does not mean they are willing to
replace their TV, spend money or actually go out of their way to buy a
device that enables them to do this. I'm "interested" in having a
blu-ray player, but to date, I have not spent the money to replace my
DVD player. Being interested is not enough and is not a sign that
adoption will take place.

I don't think anyone would debate that the Flash Platform is not going to come to the living room by way of the TV set or set-top box, in any large quantity, anytime soon. And Adobe could be laying the groundwork and going after this market today for what may happen five or ten years down the road and looking to the future instead of the present. But unlike Flash on the PC, Adobe has to rely directly on the TV and set-top box manufactures in order to make this work. And considering who Adobe has to deal with and the host of problems those companies have, I would not want to have to rely on them in order to have a successful platform.

Here is a roundup of all the news I have seen come out of NAB as of this morning. I will update this list as the releases come in or as I find more of them on the wire:

• Level 3 Enhances Video Services Portfolio With Launch of New Managed Video Network Services

• New Limelight Networks Platform Enhancements Enable Content Publishers to Deliver Brilliant Web and Mobile Experiences

• Adobe Advances Content Creation, Delivery and Playback Technologies at NAB

• Adobe Unveils New Framework for Media Player Development

• Adobe Extends Flash Platform to Digital Home

• Brightcove and Adobe Expand Strategic Alliance and Further Adoption of the Adobe Flash Platform

• Inlet Partners with ZillionTV to Enable Breakthrough Online Distribution of High Quality Personalized Television Content

• Equilibrium Introduces EQ Network Hosted Service to Automate
  Personalized Video Delivery and Monetization Via Advertising From Any
  Web Video

• VBrick Introduces Rich Media Studio at NAB

• Encoding.com Partners with Brightcove – Encoding.com Services Now Available Through Brightcove Online Video Platform

• Envivio 4Caster C4 is First Carrier-Grade Encoding Platform to Support Microsoft Silverlight DRM-Protected IIS Live Smooth Streaming

• Harmonic’s Video Transcoding Solution Integrates YouTube Fingerprinting Technology

• Open Box Technologies Introduces SesameVault 2.0 to Bring the Power of Web and Mobile Video to Businesses

• BuyDRM Showcases First Microsoft Silverlight DRM Solution for Live Smooth Streaming

• CDNetworks Deploys Adobe Flash Media Server 3.5 Software Streaming Video Solution for Commercial Use

• Microsoft Smooth Streaming Provides True High-Definition Video Delivery

In a NYTimes.com article today, a YouTube spokesman said that a recent report published by Credit Suisse that indicated YouTube would lose nearly half a billion dollars this year was "inaccurate and based on conjecture". For a company that has no business model and will never be profitable with their current mentality, this denial on YouTube's part should come as no surprise.

What Google has failed to do is give anyone any reason to believe them. Simply saying a published report is "inaccurate" means nothing without them giving us any kind of clarity, which they won't do. The report said that YouTube would lose about $470M for the year and Google is not saying is how the report is inaccurate, or what the margin of error is. Google could be accurate with their statement as they could be losing more than $470M this year, or could be losing less. But even if the numbers in the report are off by say 30%, YouTube would still be losing nearly $300M this year alone. That's still a huge number.

YouTube can't be profitable, not this year, not next year, not three years from now. It has no business model, but not for lack of trying. YouTube is the quintessential example that dispels the notion in this industry that all you need is lots of eyeballs to have a profitable, sustainable business model. Google has tried paid downloads with their video store, ad rev share models of every kind, licensing of premium content and now in the NYTimes.com article it says YouTube "might eventually ask users to pay for some of its premium content". What hasn't YouTube tried?

Licensing premium content is only going to make YouTube lose even more money, not less. Their cost of licensing and distributing that content will be greater and the only way to make up for that cost is with an increased number of eyeballs to the content, yet even that won't guarantee success. While YouTube is the king of eyeballs, if the premium content they reference is targeted to a wide audience, YouTube's CPM will be lower since the ads won't truly be targeting a core set of viewers.

While the NYTimes.com article says that the recently announced content deals which includes Sony, Lions Gate, MGM and others, "are significant because YouTube dominates online video", who wants to "dominate" an industry by losing hundreds of millions of dollars a year? The author of the article is quick to point out that YouTube "is struggling to profit from its digital popularity", but does not say what YouTube classifies "premium" content to be or how that plans to help them make money. I'd be willing to bet that when we see the entire list of content coming to YouTube under this "premium content" announcement, none of us, as consumers, will classify it as "premium" content. The dictionary defines the word premium as "best", "finest" and "first-class", not exactly words I would use to define "The Addams Family", content YouTube is getting under this "premium" announcement.