2011: The Future of Consolidation In The Online Video Industry

[Commentary] In this season of reflection and predictions, the online video industry continues to be a trending topic. Among the top digital media stories in recent weeks have been news of multiple mergers between leading video ad networks -- and speculation of additional tie-ups to come.

Part of the driving force here, of course, is the simple fact that YouTube already reigns as the top video ad network and in 2011 will expand its ad products, targeting capabilities and ad exchange, forcing continuing consolidation among the other video ad networks. YouTube delivers more reach than any of the ad networks, offers the same quality of video content, and is investing the resources to develop tools to support advertisers looking for mass audiences and commodity content. Ad networks will have no alternative than to consolidate to compete with YouTube. But consolidation among video ad networks is only the first step; the next phase will center on the increasing importance of content verticalization.

In 2011, expect to see consolidation among video content companies, especially among destination sites that attract meaningful audiences by focusing on a specific content category. The focus on building out vertical content offerings in online video will mirror what we've seen in the cable TV industry over the past several years. The consolidation will happen in two ways: 1) the aggregation of properties within a content category; and 2) the aggregation of properties across content categories. Viacom is a model for both forms of aggregation.

[Hachenburg is CEO of Metacafe, an independent online video site]