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DailyMotion’s decision to offer HD online video delivery is again raising questions about the value of delivering high quality content online.

TV, to those in the business of making money from it, is a medium for delivering advertising to consumers. Compelling content drives the audience and HD video is only valuable to the extent it increases revenue potential for those delivering content.

For broadcasters, HD carries intrinsic complexities in the form of workflow changes and system upgrades to deliver high quality content but once those have been implemented there are no incremental costs based on the number of viewers.

Because of the incremental costs associated with volume of online content delivery, the value proposition for HD online video is an entirely different beast.

Content is still king. Consumers will watch programming that interests them in whatever format it is available. And because professional content is tightly controlled by those who produce it, there are only two reasons a profit-driven company would decide to offer HD content online:

a) A marketer is willing to pay more to advertise on HD content
b) Enough viewers are willing to pay to view the content in HD.

So far those beginning to offer HD video online appear to be hoping for option A to make it worth their while. Move Networks‘ HD player has increased engagement, and advertisers are paying a premium to reach online viewers as a result. ESPN 360’s addition of HD shows Disney’s belief in the value HD video online, when done well.

Aside from porn sites, no one is offering option B. A number of sites offer subscription content, but most offer lower quality content.That’s what most end-users can view and the content itself is what is driving subscription sales. MLB.com offers users an option to pay a higher subscription rate for higher-bitrate video; the cost has to be passed on to the end user for it to make sense.

And so DailyMotion follows Vimeo in offering HD to end users. While itwill generate buzz, possibly a few more views, and a few more seconds of viewing time, the content and user experience offered by these sites will need to be much improved before it is worthwhile.

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