“Video ad revenues are expected to increase significantly in coming years for YouTube’s US operations, particularly as mobile video viewership grows,” said the report. Television remains the biggest global recipient of ad spending globally: in the US advertisers are expected to spend an estimated $66.5bn in 2013. But eMarketer is projecting only modest increases over the next three years. “There’s ongoing fragmentation in viewing,” said Dan Cryan, senior director of digital media with IHS, a media research firm. “TV viewing is more or less flat but total video viewing is going up and that’s being driven by things like YouTube and Netflix.”
YouTube, acquired by Google in 2006 for $1.65bn, has more than 1bn viewers every month and attracts about a fifth of all advertising spending on US online video. It has faced competition from rival sites such as Hulu, which expects to generate $1bn in advertising revenues in 2013, but it has maintained its lead. Hulu, owned by Walt Disney, 21st century Fox and NBCUniversal, has twice explored a sale only to call off proposed deals at the last minute.
Heightened advertiser interest in YouTube comes as a new generation of online video production studios have sprung up to cater for a younger generation that watches most of its television programming online.
Investors are clamouring to get a foothold in these companies: Maker Studios, one of the biggest online video networks, recently brought in investors to join a shareholder list that includes Time Warner, Elisabeth Murdoch and Robert Downey Jr, the film star.