Magna forecasts the US market for online video will grow by 32% this year, rising from $531 million in 2008 to $699 million in 2009. While these figures represent downward revisions from our forecast for the sector in the middle of last year (prior to the subsequent escalation of the recession), these gains will likely outpace growth rates for most other emerging media platforms.
The reasons for growth are simple: as marketing budgets are reduced across industries, advertisers look to reach their consumers in a more targeted and cost-effective manner. User-generated content accounted for a significant volume of potential advertising inventory in the past, although little was considered desirable for larger brands, given their collective preference for association with professionally produced content. But in recent periods, the expanding availability of premium network and cable TV programming combined with increasing broadband penetration – now covering 60% of US homes by our estimates– collectively led to a 24% increase in time with professionally produced online video during 2008, following a 50% rise during 2007, according to Accustream.