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Another company has joined the online video sharing graveyard.  This time it’s Grouper, one of the first viral video sites, which Sony bought last year for $65 million. That announcement caused many to wonder if it signaled the start of a shakeup in the industry. Grouper has decided to change their business model as well as their name, and leave the traditional CGC (consumer generated content) online video sharing space currently dominated by YouTube.

The new “Crackle” is a “streaming entertainment network dedicated to the discovery and development of pioneering video creators across a diverse range of genres” – which is a fancy way of saying they are a sort of dating service to connect video professionals with Sony and its partners. The message from Crackle and Sony seems to be they are aiming for more professional content in video, and helping connect talented writers and producers with the right people at Sony for fame and fortune.

Just like the early years of the online photo sharing market, when lots of companies flared up and then died, the online video sharing market, in its current incarnation, has had hundreds of companies enter it, only to see dozens disappear (already). This, of course, is a natural sign that the online video sharing market is beginning to mature, with a few top tier players growing their market share, while the me-too brands with nothing novel or new to offer fall by the wayside.

So where did Grouper go wrong? In my opinion, like other 1.0 video sharing sites who have positioned themselves directly against YouTube with little differentiation, Gouper could not achieve the mass market appeal that YouTube achieved by being first to market. Without scale (participation and viewers), which is necessary in an advertising driven business model, they could not achieve the critical mass necessary to drive long term profitable growth.

LifeGoggles has done a nice job of summarizing the top companies in the current online video sharing space in their Ultimate Guide to Online Video. More than 50 startups are profiled. This month, they released version 3.6 of their online guide. So, with the Grouper announcement, it looks like they have some updating to do.

Look for more shakout and change in the online video world — as most companies continue to be just close derivatives of YouTube. In addition, look forward to some fresh, new innovative ideas and clever business models being hatched in online video in 2007 and 2008. Offerings that will prove not to be just copycat Websites, but will cater to different audiences as well as the evolving mix of interests and social expression on the Web.