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12207Re: Valuing Online Video Properties with Web Metrics

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  • nevertrustab
    Jul 31, 2007
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      I would like to add that Youtube could have large amounts of
      international traffic, too. Just as Google has a market share of
      over 90% in search here, I'd estimate Youtube's market share in
      video to be similar in the world of video.

      My friends use the word youtube in everyday language just like
      they've been using the word Google. If you said "what is you tube?"
      most people (who use the web frequently) would probably give you a
      weird look :-).

      I know you didnt say the opposite, i just thought this would be
      interesting to some people. I think it's pretty popular in other
      international countries, too not just/mostly the US!

      --- In webanalytics@yahoogroups.com, dhs1986@... wrote:
      >
      > IMO this is overall a reasonably sound approach, but I might
      caution against using Compete data for valuation analysis given that
      it is US-only. Sites with a large amount of international traffic
      (like DailyMotion) won't receive apples to apples comparisons with
      sites that draw most of their visitors from inside the US.
      >
      > Also there is some controversy with regard to the quality of
      Compete data due to possible concerns about sample bias (part of the
      data they collect is captured using a toolbar that anyone can
      install on their desktops). For example they recently reported on
      their blog with some fanfare that Digg attracted more visitors than
      Facebook in May, something that not only sounds highly implausible
      but is contradicted by every other source I checked (ComScore,
      NetRatings, etc), most of which report that Facebook drew more than
      twice as many visitors as Digg during that month.
      >
      > As troublesome as ComScore and Nielsen are, it's really starting
      to look as though the free traffic tools like Alexa, Compete, and
      Quantcast are worse IMO.
      >
      > David
      >
      > -------------- Original message --------------
      > From: "Ravi Pathak" <ravipathak1@...>
      > Nice work !! The bigger assumption is that the rate at which
      google paid for
      > market leader (read youtube.com), other buyers are willing to buy
      at same
      > rate for followers.
      >
      > I dont think this holds true. Market leaders will always get
      premium and
      > followers are generally laggards in terms of valuations.
      >
      > still not sure how much you will discount though.
      >
      > -R
      >
      > On 7/30/07, ejt11three <ejthomas113@...> wrote:
      > >
      > > There's been a lot of discussion of how to value hot online video
      > > properties, like Youtube. There of course are many factors to
      this,
      > > but I propose a simple valuation model by using common web
      metrics to
      > > gauge user engagement. In other words, a simple way to value an
      online
      > > video property is in terms of not only how big its audience is
      but
      > > also how engaged they are (similar to a TV show). The more
      attention
      > > we have, the higher the prospects are for gaining advertisement
      > > revenue, and therefore the more valuable the property is.
      > >
      > > Using this model we can also gauge what other online video sites
      might
      > > be worth by comparing user engagement relative to that of
      YouTube.
      > >
      > > We will use the common web metrics (i.e. visits and average time
      spent
      > > on site). I prefer using these to unique visits alone because it
      hard
      > > to measure what constitutes a unique visit vs. a non-unique
      visit.
      > > Also, the number of unique visits by itself isn't very telling.
      This
      > > metric should be combined with average time spent on site to
      establish
      > > a better unit of engagement. I will use data from Compete.com
      > > (www.compete.com) for my analysis.
      > >
      > > From the people, visits, and average stay metrics on Compete.com
      I
      > > come up with a term called "people hours." This basically serves
      to
      > > measure end-user engagement. It is similar to a term borrowed
      from the
      > > gaming industry such as the "free-to-play, pay for merchandise"
      model
      > > for online games in China. From this engagement metric we can
      distill
      > > how valuable a site is based on how valuable the potential
      audience
      > > may be.
      > >
      > > In this example I use the YouTube's acquisition price and
      Compete's
      > > April numbers to set a baseline. Keep in mind that YouTube's
      traffic
      > > has grown significantly since its purchase by Google in November
      of
      > > 2006, so this may lead to conservative cross-analysis.
      Nonetheless,
      > > since Youtube is number one, and number deserves a premium, I
      assume
      > > these effects will cancel each other out.
      > >
      > > According to Compete.com, YouTube had 150,652,781 visits to its
      site
      > > in April. The average stay on its site was 15 minutes and 52
      seconds
      > > (i.e. 15:52) or 952 seconds. We multiply this by the amount of
      monthly
      > > visits (150,652,781 x 952) and we get 143,421,447,512 visitor-
      seconds.
      > > We can also calculate visitor minutes and hours by dividing this
      > > number by 60 (which would give us 2,390,357,459 visitor minutes
      or
      > > 39,839,291 visitor hours).
      > >
      > > Since this is monthly data, we can furthermore divide these
      numbers by
      > > 30 to get visitor second, minute, or hour on a per day basis.
      Doing so
      > > we get 1,327,976 visitor-hours per day for YouTube.
      > >
      > > Now let's divide the price Google paid for YouTube (i.e.
      > > $1,650,000,000) by visitor-hours per day (i.e. 1,327,976 hours).
      This
      > > would give us $1,242.49 per visitor-hour on a daily basis.
      > >
      > > Now lets compare some other online video properties.
      Dailymotion, the
      > > popular French-based video sites ranks in at number one next to
      > > YouTube with 23,632 visitor hours/per day or 1.78% of Youtube.
      Using
      > > our model this would bring it's valuation in at just shy of $30
      > > million. Heavy.com, Metacafe, and Break follow respectively.
      > >
      > > Here is the the model that I put together in an excel
      spreadsheet:
      > > http://edwardjthomas.org/video/video_valuation.xls
      > >
      > >
      > >
      >
      > [Non-text portions of this message have been removed]
      >
      >
      >
      >
      > [Non-text portions of this message have been removed]
      >
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