Web video makers rake in millions

19 September 2011 Last updated at 22:59 GMT By Ellie Stanton and Matt Danzico BBC News, Washington Online video content creators are now making significant amounts of money from a myriad of websites

Since the explosion of streaming video several years ago, hosting sites have become home to a crop of young video makers attracting devoted followings for everything from music and sketch comedy to make-up tips.

Meanwhile, online video has become a career for thousands of video creators, with some making hundreds of thousands of dollars each year.

And in an uncertain job market, many are finding ways to cash in on the opportunities afforded by web video.

As online video viewership has grown - YouTube reportedly draws 500 million unique visitors each month - marketers hope to take advantage of the dedicated audiences and low barriers to entry.

Six-figure incomes

Video creators in turn are making money from hosting sites such as YouTube, DailyMotion and Blip.tv, which share a portion of the profits derived from video and banner advertisements.

YouTube, for one, has distributed millions of dollars in advertising revenue to its 20,000 most popular amateur producers since 2007.

Blip.tv, which hosts the Annoying Orange comedy show describes its content as "the best in original web series"

"We share millions of dollars with our partners every year," said Tom Sly, the site's head of strategic partner development.

The amount advertisers pay varies with the popularity and quality of the videos, with creators receiving as much as $20 (£12.70) per thousand views.

"Across the board we're seeing those numbers increase as we see higher quality content and the ability to target users so that advertisers have more fine-grained control," Mr Sly said.

In 2010, the number of YouTube partners making over $1,000 (£600) per month from advertising revenue went up 300%, the company said.

The company declined to release specific figures, but Mr Sly said "hundreds" of video creators make more than $100,000 a year and "thousands" make more than $10,000 a year.

Sponsorship deals

The top performing web shows on Blip.tv are on target to take in more than $1m in advert revenue each, said Eric Mortensen, senior director of programming.

"There are certain class of people, and it's not that they are rejecting TV, they never even thought to be like TV in the first place," he said. "And because of that they are doing new and different things and that's how they end up making money."

Mike Michaud, who started online production company Channel Awesome after being losing a job at an electronics retailer, says the revenue he earns from host Blip.tv has enable him to hire six full-time and two part-time staff members.

"I don't have the daily grind that a nine-to-five usually entails," Mr Michaud said.

"I wouldn't say I'm living comfortably just yet, but I am living much better than before."

Industry analysts say that online video audiences are loyal and attentive and feel a connection to the creators.

In addition to advert revenue sharing, some video creators make as much as $150,000 a year by cutting sponsorship deals with major companies, said former YouTube executive George Strompolos, founder of Fullscreen, a start-up that aims to facilitate connections between corporate sponsors and video creators.

Aware of the power of recommendations from such seemingly personal relationships, companies like Ford, GE, and Lancome are directly reaching out to video makers to hawk their products.

Rocketboom, which launched in 2004, was among the first US online programmes to make money

Online video creators work without the need for teams of agents, managers, markets and developers, Mr Strompolos said.

'Quit your job'

"Online video tends to be a one-stop shop solution," Mr Strompolos said.

"You get not only the creative development and the authenticity of voice you're looking for, but you also get distribution and reach."

As the online video advertising and merchandising infrastructures become more sophisticated, analysts say more and more people are likely to strike out on their own in web video.

"I see this becoming the new television, but a place where the average person has a much better chance of getting noticed and making money than if they were to go the traditional route via Hollywood," Mr Michaud said.

Alan Lastufka, author of YouTube: An Insider's Guide to Climbing the Charts, said: "The money may not always be headline-worthy, but it's enough to quit your day job, stay in the basement on your computer and spend your time connecting with fans."

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EA preparing for 'multiple millions' of Star Wars gamers

EA/BioWare

Electronic Arts says it won't release "Star Wars: The Old Republic" until it's sure the game is ready.

As we gamers sit here waiting ... and waiting ... for Electronic Arts to tell us when they will launch their highly anticipated "Star Wars: The Old Republic" online game, EA continues to tease us with tidbits about how well they expect the game to do.

Patience, young Jedi. Patience. All will be revealed soon enough.

In its first quarter earnings conference call this week, Electronic Arts talked up the forthcoming massively-multiplayer online role-playing game (MMORPG) – an epic Star-Wars-themed game designed to take a bite out of the seven-year-old "World of Warcraft" game published by rival Activision.

Which character class would you play?

"We feel very bullish to be able to come into this category with a fresh offering, something that's brand new that appeals to a majority of that category," EA Games label president Frank Gibeau told investors, according to a transcript of the meeting released by financial analyst site Seeking Alpha. "And it's a category that hasn't seen a lot of releases that fit the scale over the years and we feel like we're in a good position to pick up on a lot of latent demand."

What kind of demand are they expecting? Well, for starters, Gibeau said they see the MMO category as being a "tens of millions person opportunity."

And Gibeau said, "We've got a very aggressive plan to be able to scale multiple millions of users coming into the Star Wars franchise and service this fall."

And they'll need those multiple millions of subscribers to make the game a solid financial investment.

EA CEO John Riccitiello told investors that the game starts to become profitable at about 500,000 subscriptions and "makes good money on an ongoing basis" at 1 million subscriptions. But really, considering how much money they've put into this game and into purchasing the game's developer — BioWare — he said, "anything north of 1 million, as we approach 1.5 million or 2 million, starts to look like a great investment."

For the record, "World of Warcraft" currently has some 12 million monthly subscribers.

But apparently EA has good reason to be feeling "bullish" this early. Though EA wouldn't release the specific "Star Wars: The Old Republic" pre-sale numbers, they have apparently broken the company's record.

"In general, the pre-order numbers are ahead of our expectations on Star Wars," Gibeau said. "It's the largest number we've done at EA in comparison to other titles. The next closest title is 'Battlefield 3,' and it was up significantly from there."

As for the launch date that has MMO and Star Wars nerds hanging on EA's every word, Riccitiello told investors that they will reveal more at their next earnings meeting, but in the meantime they are pushing hard to launch the game sometime during the final three months of this year.

But he said the launch could get pushed back into early next year if their testing showed that they needed to do so to ensure the quality of the game and its digital distribution at launch.

Paying customers, he said "have high expectations for perfect performance, and that's what we intend to provide at launch."

(Thanks to Seeking Alpha for the meeting transcript.)

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Winda Benedetti writes about games for msnbc.com. You can follow her tweets about games and other things right here on Twitter or join her in the stream right here on Google+.  You can check out the In-Game Facebook page right here.

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