Money keeps flowing into bottomless videopit
Various sources report that venture money keeps flowing into online video services. Two services have seen a combined funding of no less than 70 million USD.
With YouTube being the by far dominant player and the defacto search engine for online video (which, I suspect, is why Google snapped it up), I really don’t understand the rationale behind these investments.
Backbone structures and bandwidth is starting to become a discussion topic, and there’s still no real business model for monetizing these services on any scale compared to the money being put in. Of course it could be an investment for the long term - which I think it has to be - but venture capital is not usually so patient.
So what’s the deal here?
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2 comments
Hi Mads,
As I see it, this is all about getting information and users. Plus there is no doubt video will play an even bigger role in the future as we get even less time to receive commercial messages and TV will have to “give up” a bit more.
You know I believe “user is king” and I guess I’m not alone. The big difference is what these investors will do with the information and user data to make an exit? Only time will tell but just have a look at what Google know about all their users today. In my point of view this is exactly why you still see a lot of money pouring into, seeming, bottomless pits.
Well that’s my humble opinion anyway.
Hi Joachim,
To an extend I do agree with you. However I also fundamentally believe that having a ‘business’ that accumulated losses at the scale which video start-ups currently do is very unhealthy. I doubt whether you can make up for it in monetizing data, because that will trigger all sorts of privacy issues. In other words the founders of these companies will be caught between
(1) VC’s looking for massive returns on investment,
(2) users who don’t want to pay neither with cash or eyeballs,
(3) data that may be of little practical use due to privacy issues.
Talk about a rock and a hard place…
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