Veoh cutbacks, Disney buying into Hulu: Survival of the fittest in online video

With Disney now reportedly very close to making a deal with Hulu (sorry, YouTube), it’s clear that all the action in online video is consolidating around a very small number of websites. Even the top tier of sites are struggling to figure out how to monetize all their content. So those in the second tier are pretty much screwed. Being just another site with user videos and full episodes from the networks that syndicate their stuff (MTV, CBS, Hulu, etc.) doesn’t cut it.

So perhaps it’s no surprise that just as Disney is preparing to invest in Hulu, Veoh is laying off about a third of staff, losing its CEO, and re-orienting its business plan to focus on a browser plug-in that helps users find videos they might want to watch (details here).

Interestingly, when Veoh was first starting a few years ago, I interviewed founder/CEO Dmitri Shapiro (who got replaced by Yahoo vet Steve Mitgang and is now taking his old job back) and he said this technology would be at the heart of his company and the future of video on the net. In a 2006 story, I quoted Shapiro saying this: “”At the end of the day, it shouldn’t be relevant who made [the video.] What matters is that each user is proactively
being programmed whatever it is that he or she wants to see.”

In the past two-and-a-half years, Veoh, seems to have gotten caught up in all the excitement surrounding user-generated videos and TV episodes online. But a business model never coalesced and now Veoh is just another purveyor of commoditized content. Its solution is to go back to the founder’s original thoughts and try to program Web video individually for each user, rather than bring them the same stuff they can find a dozen other places.

Of course, there will be a successful monetization model for online video at some point (at least those of us interested in the media business not dying had better hope there will be). But it looks like it will take the deep pockets of Google, or News Corp., NBC Universal and Disney, to find it

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