Study: 36 Percent of Americans Watch News Online
As news outlets continue to invest in online video, the ad revenue outlook for such ventures remains unclear, according to Pew Research Center's annual State of the News Media report.
The study, released Wednesday, found that the 36 percent of U.S. adults who choose to watch news video online are likely to have a college or graduate degree, make over $75,000 annually and be under 49 years of age. Also, 53 percent of smartphone owners watch news online and more adult Americans watch news clips online than sports videos (22 percent) or political clips (22 percent).
But despite a significant number of Americans engaging with online video, ad revenue on video isn't as significant. The study cited data estimates from eMarketer showing that digital news video only accounts for $4.15 billion of the $42.58 billion in digital advertising revenue in 2013.
Online "news video does not necessarily have a clear or simple path to becoming a major form of news in the future," the authors of the report wrote. "Producing high-quality video -- or even streaming it live -- can be costly, and the payoff is not clear. Video advertising, while on the rise, amounts to just 10 percent of all digital ad revenue and just 2 percent of total ad revenue."
The Pew Research Center survey arrives as many legacy news organizations are increasing their investment in online video and competing with new media outlets in the space.
Newspapers, including The Wall Street Journal, the Washington Post and The New York Times, have created high-profile online video operations, in some cases creating cable news-style shows online. Magazine publisher Conde Nast has debuted video channels for Vanity Fair, GQ and Wired, while Time Inc.'s Time magazine launched a dedicated documentary films unit.
Vice Media's newly launched online news network and The Huffington Post's HuffPost Live represent major new media offerings. But for network, cable and local television stations, only a small amount of their ad revenue arrives from online offerings.
"Another drag on the incentive to innovate comes from the fact that for legacy producers of video news content, the vast majority of their revenue still comes from television," the Pew Research Center authors wrote. "Fully 37 percent of total cable revenue, 81 percent of network revenue and 94 percent of local TV revenue come from legacy advertising."