Investors have poured $8 billion into the online video business in the last three years but have yet to see a return on investment, according to Silicon Alley Insider. That figure comes from venture funding numbers from Dow Jones VentureSource as well as acquisitions, like Google's $1.65 billion purchase of YouTube.
The industry has yet to produce a profitable company, Silicon Alley Insider said. YouTube is considering adding pre-roll ads to the site, a move that could hasten profitability, but also tick off consumers who dislike ads that run in front of videos.
Forrester Research has said advertising in streaming video hit $471 million last year and should reach $7.2 billion in 2012. While advertising is not the only revenue stream—online video technology firms for instance get paid license and delivery fees—it is ultimately the financial foundation for the industry.