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Thursday, June 08, 2006

Successful Online Video Startups

Bambi Fransisco writes, quoting Dow Jones sources, that during the first six months of this year, the amount of venture dollars invested in Internet video startups rose 45% to $156 million. Nineteen companies received that funding. If the investing continues apace, the dollars pouring into this sector will surpass the $267 million million invested in 40 startups in 2005. All told, since 2002, 139 video or video-related startups received a total of $954 million in venture financing.
I am indeed amazed at the investments being made in this field. Agreed that this could be a growing field and an important one moving forward.
The internet majors, Google, Yahoo, AOL all are going after this space besides innumerable startups.Now comes the question : how will these make money? Whats their business model? The common denominator is build services, deliver well, get a loyal set of users and money will follow. I am probably a little old fashioned to take it at face value .I think that if this is the case, several search engines that were launched during the dot com era must be doing decent business – in reality while some have gone belly up – barring a few, most are in a state of continual decline. A look at the traffic flow of yesteryear celebrities like Altavista, Excite, Lycos etc all make sad reading

So are such type of business doomed? Not really. My view is that if online video startups invested in building high quality video content, categorise these( currently some of them talk of thousands of videos – majority of them are at best crap material), look at models for making copyright & distribution monetization opportunities in innovative ways, chances of sustainability look possible. Communities that evolve around such models provide newer opportunities for third party services to leverage these and therein lies the secret for success.

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