Back in May 2007, CBS acquired comedy video site Wallstrip. Soon afterward, the network shut it down.  When doing so, CBS brass said they would take the Wallstrip spirit and apply it to other Web efforts.  Then the recession hit and online advertising hit a speed bump.  CBS shelved most of its Web video aspirations.

Faring slightly better, in 2008 NBC Universal’s Local Media division acquired, whose 1stLook airs in New York City taxis, on WNBC’s 24-hour network, New York Nonstop, and on American Airlines in-flight entertainment.

Last year, AdConion bought Red Level (aka Kush TV) and folded the branded content vehicle into its overall offering.

Besides these deals, we’ve largely seen a number of high-flying shutdowns, including Ripe Entertainment (despite raising $45 million in funding) and PodTech (with $7.5 million in funding).  Mania TV shut down briefly but came back this year after a change of control.

There remain a number of other companies trudging along hoping for the online video market to take off.  The problem is that even if this happens, the first benefactors will be the largest media organizations that have video inventory and existing sales teams, be it Yahoo or ESPN.  Then you will have the leading video destinations such as YouTube and Hulu.  Without a doubt, over time, the content producers who survive will have a very promising future, especially as reach-driven network ad buys get replaced with branded content integration deals.

But the reality is that while television advertising is a $70 billion market and total online advertising is a $30 billion market, online video advertising barely cracked $1 billion in 2009.

As a result, unless you have multiple revenue streams and a low cost structure, the best-case scenario for many content producers right now isn’t an independent strategy, but one where they are folded into a larger company with a larger audience and a sales team to monetize it all.  That, however, can’t be your sole strategy because while the M&A market has recovered, the list of larger companies that can sign those checks falls under two buckets: television companies and print companies (even those with assets in both, such as a Hearst, tend to fall under one, in Hearst’s case print).

The thing is, print companies escaped near-death experiences in 2008-09 and are showing signs of life after massive cost-cutting.  But kid yourself not, even a believer like Warren Buffett is blown away by “how fast the newspaper industry is losing ground.” While newspapers (and magazines) should be scrambling for ways to leverage their content in a digital age, they’re experiencing “iPad myopia” and “video impotence.”

Television companies can’t even be bothered.  Apart from the WallStrip and deals, generally speaking television media companies are focusing solely on monetizing their vast archives.  Last week CBS promoted Zander Lurie to senior vice president, strategic development, serving “at the center of CBS’s next-generation content initiatives, including oversight of the Company’s efforts to explore authentication and other new, additive methods of distribution and monetization.”  Honestly, I don’t blame them: clearly there is a demand for “premium content” that players like WatchMojo (or Revision3 and Next Net Networks) are producing — but those who have “super premium” programming (like NBC, CBS, ABC, FOX, etc.) will be incentivized to generate more revenue from that asset before turning any meaningful attention to made-for-web content.  Of course, we’ve seen this story before: there will never (never say never?  I am saying never!) be enough digital dollars to offset lost analog dollars.  The Web shrinks media — and the sooner participants realize this, the better.

Meanwhile, Big Media is partying like it’s 1999, doling out bonuses like it’s printing money: “Anybody who reads the business section knows the margins are being squeezed at media companies, so the fact that there are these huge packages makes no sense,” said James F. Reda, the founder of James F. Reda & Associates, a compensation consulting firm, quoted in The New York Times.

What also doesn’t make sense is that while “five companies (Time Warner, Disney, Viacom-CBS, Comcast-NBC Universal, Fox) control 85% of video-viewing hours in America,” as consumers migrate online, there will be a great need for made-for-Web programming, instead of the repackaged stuff traditional media insists on shoving before consumers.

Any amateur student of history or media intern will recognize that much the same way that Google, Yahoo or AOL generate more online advertising revenue than the traditional media companies, a similar pattern will develop and emerge with digital video.

Indeed, when it comes to traditional media companies and digital video, those who can, won’t — and those who want to, can’t, with television falling in the former camp and print in the latter. But everyone’s reluctance and inability to take steps is turning into self-fulfilling prophecy and a recipe for disaster.