Backing Away from the Video Balloon

videobubbleThere’s plenty of hints that the digital video economy isn’t quite as robust as publishers desperately want to believe.

By some accounts, 75% or more of all global mobile traffic will be video by the end of this decade, according to Chris Sutcliffe in The Media Briefing.

“Facebook, whose shadow looms over every recent media development, is on record as saying its news feed will be mainly video within five years,” he continues.

These predictions are spurring the incredible rise of digital video publishing by brands looking to capture their share of eyeballs…and a share of advertiser dollars. Sutcliffe points out the fatal flaw in this plan, saying “…video is just as subject to the laws of supply and demand as any other commodity, and there’s a hell of a lot more video available than there is advertising money to support it.”

Part of the reason for this disconnect is the simple fact that 80 percent of what we see online is user-generated content (UGC), and distributed on Facebook or YouTube. It’s not being created as ad platforms, in the way that a magazine product might be. And while it might offer scale, it doesn’t offer a lot of revenue.

“Those aren’t the kinds of advertising that most media companies are doing as they rush into video—most of them are selling traditional pre-roll, which virtually no one ever watches, and hoping that the price they’re getting for a three-second pre-roll ad on a 30-second-long video clip isn’t going to plummet the same way that display advertising on the web did,” explained Mathew Ingram in Fortune.

He calls it out, saying that video advertising will be the next bubble to pop. As Sutcliffe explains, the combination of UGC and the “low-value” environments on which video is distributed make it hard to see any other way for this story to end.

We know it’s going to pop; we just hope it’s not too close the face when it does.