The term ‘Online Video’ encompasses a broad range of business activities.  This has lead to confusion in the media and in the marketplace. For businesses looking to use online video as a means of communicating with their key audiences, the future of online video is indeed bright. For portals and services looking to commercialize the distribution of the millions of videos available online (entertainment, corporate, user-generated… whatever) through advertising or service fees, the future is at best, uncertain.

Déjà vu? We’ve already seen how things will shake out for online video distributors. Remember Napster, Yahoo Music or Viacom’s Urge? The music industry struggled though the same painful consolidation that the online video consolidation and distribution industry is experiencing today. (The Ad Networks are next… the Content Delivery Networks are still in their growth phase.)

The VC’s that invested millions in too many similar ventures have turned off taps. Consolidation in the industry has started and will pick up steam in 2009. That will leave a number of dominant players like iTunes and Amazon on the fee side of things, companies like Hulu and YouTube as portal players and a few other heavy weights like Microsoft and Facebook (and perhaps a couple of the major TV networks) to round out major services.

While the portals and distributors of online video sort themselves out, the use of the online video as a communications medium continues to flourish.