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Does Google have the key to monetising online video?

Google CEO Eric Schmidt came out earlier this week saying that he hasn’t yet figured out the perfect solution for making money from online video. His comments come after Google’s earnings report revealed that the $1.65bn acquisition of YouTube is yet to reap the kind of financial rewards that were hoped for.

But across the board, advertising in online video is something that still hasn’t been addressed properly, and the PCTV market is going through an interesting phase. Lack of content has already forced the once heralded Joost to retreat to the US and niche content areas. Hulu is doing well with content, but finding many of the same issues with advertising as the rest of the market. Meanwhile others such as Vuze are hoping that a technology advantage in delivering high-def content will help them gain cut-through.  

But while different online video providers are fighting to carve out their own niche, none has yet addressed the major issue for driving advertising revenue – and that is finding a genuine format and solution that works for advertisers – and educating them about it.

Schmidt was typically cryptic about what answers Google has planned saying only that top secret new products would be launched this year and that the advertising format – whatever it is – will be valuable to consumers as well as advertisers themselves. He insisted they will go far beyond the in-line text ads, overlays and top and tail ads that are already common with online video.

 Until then, plenty of others are just playing catch-up and trying to squeeze more value out of a model that is far from perfect. Warner Bros has just announced that it will offer its DVD film titles online, on-demand on the same day they release the DVDs, which is progress, but a long time coming… Will Google come to the rescue?

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