Youtube: The cause of Megavideo

After acquiring You-tube, Google implemented the 10 minute restriction in the video length. The increase in number of members in You-tube and the increase in number of videos would have needed system upgrades(data centers) to provide the service without any interruption. The number of members cannot be restricted and so the only other alternative is to restrict the length of the videos. But there is a flip side to it.
With the 10min restriction, an one hour video would be divided into 6 video segments. The person watching the first segment would most definitely watch all the other video segments. So instead of 1 page view there will be 6 page views and subsequently 6 times the ads — and yes.. Ka Ching!! more ad revenue.
A very clever solution indeed!

This 10min restriction became a pain point to users who are looking for longer video and this pain point was very cleverly exploited by Megavideo to create a whole new successful business that has made Kim Dotcom, the founder of Megavideo very rich. Instead of the 10 min video model the beleaguered Megavideo made a restriction of 72min on the video run length. This 72 minute video length restriction is a clever strategic decision. Most of the movies are about 120 min run length on average. People generally start watching a movie and get involved into the story while the anti climax and climax comes after 70 mins of the movie. When the users are nail biting and excited to know what happens next, Megavideo says upgrade to the premium to watch the whole movie. When you are already so much into the movie, people generally are very much tempted to get the premium. This has worked handsomely for Megavideo.
Megavideo modelled itself solely as a video hosting website without a social element. This has helped other website that aggregate movie links and TV show links to use Megavideo as surrogate and build its own traffic.
Apart from the premium model, Megavideo also used ads to increase its revenue. Megavideo has become a home for a lot  of pirated videos. It has been working out well as you cannot find any legitimate new movies online even if one is willing to pay.
Megavideo’s value proposition is multi-fold
1) New movies/shows
2) No buffering problems
3) anonymity of uploaders
4) enables link aggregators
Following Megavideo’s example other video hosting sites like videobb.com have implemented a similar business model.