I've never been a fan of ad-supported content (video or otherwise) as the model that is going to “make” this industry. It is certainly an important chunk of the space – but not all of it.
Today, one of the few decent papers left, The Financial Times, published an article called “Ad-supported online video ‘losing ground’.” For many of this, we categorize it under the “obvious” category – but it is always good to have confirmation of the direction you are going.
From the article:
Demand for the ad-supported model, mainly used on the websites of the major US television networks, reflects the consumer’s willingness to consume things on the same terms as commercial television, said Tom Adams, president and senior analyst at AMR.
What we have is, simply, better than television or radio – that's why calls to make it “like” those two options are tossed in the trash can around here.
Oh, and get this, even in a paid world, it's still cheaper in the end.