Recession Proof Alert: Online Video

Andrea Chalupa writes: While the ground beneath the tech sector's feet rumbles with layoffs and falling share prices, there's one online industry that may be weathering the recession: online video.

Two funding deals were announced today: $6 million went to Brightstorm, an online educational video content company, from Korean venture firm KTB Ventures; Blip.tv, in a second round of funding, got an undisclosed amount from Bain Capital, financial backers of LinkedIn and LaLa Media.

Yesterday, the Chinese online video site PPS.tv announced getting $20 million in third round funding in a deal finalized prior to the Beijing Olympics.

While the deals are small, they nevertheless signal a continued flow of cash into the sector.

Indeed, it's where the Web seems to be heading. In a recent survey of media outlets, including USA Today, Entertainment Weekly, and New York's WINS-AM Radio, 77 percent of these media companies expect an increase in the use of online video.

Playboy is among those increasing online video already. Last Thursday the company announced it will close its DVD division, cutting 80 jobs and spending $2 million in restructuring costs to instead make its video offerings available only online.

Funding for online video sites has been on the rise. It nearly doubled between 2006 and 2007, from $266.9 million to $460.5 million. In just the first quarter of 2008 alone, over $217.3 million was raised.

Also rising has been the amount of ad dollars going toward online video: eMarketer reports a 55.9 percent increase this year over 2007.

In a report in March, the now-defunct Bear Stearns predicted that the sector would continue to expand.

"We believe that video will be at the very heart of the next five years of Web evolution."  

Let's hope Bear Stearns' analysts knew more about the future of other industries than they did their own.