Business Week: Online Media’s Appeal

Business Week looks at why internet video upstarts are receiving so much attention.

From the article:

“As the Internet snaps to life with homemade movies, TV shows, and other forms of video, companies that offer online video are seeing the value of their businesses surge. How much their value is rising, however, is becoming a topic of increasingly hot debate, among moguls in Hollywood, entrepreneurs in Silicon Valley, and investors in New York.

“We believe the value of (television) station assets will decline as Millennials become the most powerful user of media and (the) coveted target for advertisers,” research firm Frank N. Magid Associates said in a report. “Millennials are multitaskers with cluttered lives, shared attention and a wide array of appliances in their lives—TV remains one of them, it’s just not used in the same manner.” The report said Millennials spend 2.48 hours a day online, the same amount of time they spend watching TV, and about 2.2 hours a day listening to music.

At the same time they’re intrigued by the possibility of online video, investors and potential acquirers are skittish about its uncertainty. No one knows how much advertising can be generated from online video or which sites will benefit the most. The rapid rise of sites like YouTube raises fears that such sites could fall out of favor just as quickly. As a result, most VCs and media companies are sticking to small deals that get them into the game, without taking on the risk of major moves.

A $20 million or $30 million investment is one thing; a deal for YouTube, which could top $1 billion, is entirely different. “Buyers aren’t just basing these deals on current revenue or profits, but on a host of things a company might do for them in the future. That makes them difficult to value, which is why buyers are often more willing to take a bet on a smaller company,” MacDonald said.”

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About Daniel Davenport

Daniel is a digital media executive with internet and broadcast experience. Daniel is currently the executive strategy director at THINK Interactive.

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