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 Each time the wildly popular YouTube impresario has donned
Razer headphones in one of the many zany videos that feature him
playing games, the product has sold out.
PewDiePie, who is not paid to endorse the brand, "really helped
us in terms of getting traction on a much larger audience," said
Min-Liang Tan, chief executive of San Diego-based Razer, which
makes gaming hardware. "It's incredible that YouTube
personalities are coming up ... and I think it can only grow."
PewDiePie's uncanny trendsetting talent highlights the potential
that content related to video games holds for Google Inc as it
looks for ways to build its YouTube video platform into a
powerful new revenue stream.
Advertisers and media companies are indeed already placing big
bets on the likes of PewDiePie and others creating
gaming-related content in a bid for the prime but underserved
audience of 18- to 34-year-olds that devour video games.
Just last week Walt Disney Co agreed to fork over as much as
$950 million to buy Maker Studios, one of YouTube's largest
production and distribution networks. PewDiePie, whose real name
is Felix Kjellberg, is Maker's biggest star.
The success of the 24-year-old, with his profanity laced
improvisational videos, matches the explosive growth of
video-game-based channels on YouTube. His channel has more than
25 million subscribers who can view his content for free, more
than Beyonce's and President Barack Obama's channels combined.
Video gamers, who spent more than $70 billion last year on
hardware and software, have gravitated to YouTube. Two of the 10
most-subscribed channels and four of the most-viewed channels on
YouTube are gaming channels, according to Zefr, an online video
marketing and rights management company based in California.
Meanwhile, online video production outfits such as Maker have
grown into million-dollar operations over the past couple of
years. Lingering questions about their profitability have not
deterred investors.
Last year, DreamWorks bought Awesomeness TV, a YouTube teen
network, whose videos offer everything from beauty tips to life
advice, in a deal that could total $150 million if it reaches
certain earning targets. Time Warner Inc's Warner Bros has bet
heavily on gaming-focused network Machinima by participating in
two hefty funding rounds.
How Disney monetizes Maker's online video network and whether
the deal would affect the prospects of PewDiePie and other
content creators remain to be seen.
But gaming content on YouTube — anything from reviews and video
of gameplay to unboxing of hardware — is undoubtedly drawing a
disproportionate number of eyeballs, given Zefr's assessment.
This has sponsors and potential buyers excited.
Subscriptions across YouTube's hundreds of video game channels
tripled in 2013 from 2012, according to Erica Larson, head of
industry, media and entertainment-gaming at YouTube. Some of the
more popular content makers rake in six-figure annual revenues,
she said.
Google, which bought YouTube in 2006, is now aiming to attract
advertising dollars by bringing slickly produced content to a
platform that once featured mostly amateur videos. Gaming is a
bright spot in that effort.
YouTube, one of Google's most prized assets, has been slow to
monetize. As traditional online advertising matures, the search
giant is exploring new ad models to generate revenue. Online
video advertising is considered one of the most promising
sources of future growth for Internet companies.
Google has started to woo marketers as it seeks a bigger slice
of television ad budgets for YouTube. For instance, it has begun
offering audience guarantees to advertisers and reserved ad
slots on some of its most popular videos in exchange for
spending commitments, as first reported in the Wall Street
Journal on Monday.
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AD DOLLARS
Social Blade, a YouTube analytics firm, estimates that ad revenue on
popular gaming channels ranges from about 60 cents to $5 per
thousand ad views. Based on a channel's popularity, videos can get
thousands to millions of views.
Social Blade estimates PewDiePie's 2013 revenue to be anywhere from
$1.6 million to $16.1 million, a range that illustrates the
difficulty of independently determining YouTube revenue. The gamer
did not respond to requests for comment but has dismissed the
estimate on Twitter without disclosing details.
YouTube and outfits like Maker take an undisclosed cut of the
revenue. Most content makers "are making money through ads, but some
are working with game companies on creating content for them,"
YouTube's Larson said.
Take Devin Super Tramp, the YouTube alias of Devin Graham. He makes
promotional videos for companies with big brand names, including
game publisher Ubisoft.
Graham's first video, inspired by the shadowy world of Ubisoft's
"Assassin's Creed" game, featured a parkour artist leaping over and
around obstacles in an urban landscape, dressed in the distinctive
getup of the game's protagonist.
The video attracted 13 million views in its first three months after
it was posted and is close to more than 33 million views to date.
Ubisoft took notice of its popularity and partnered with Graham to
make more videos.
Graham, who dropped out of college three years ago to build a
YouTube video production company with partners such as PepsiCo and
Ford Motor Co, declined to disclose his revenue but said product
placements, selling video footage and advertising revenue help him
turn a profit.
THE INFLUENCERS
Working with YouTube trendsetters like Graham can help companies
garner millions of views during promotional campaigns, said Justin
Landskron, Ubisoft's director of digital marketing.
"These people ... are considered by their subscribers, many of them,
as tastemakers. And that introduction ends up being incredibly
valuable word of mouth," he told Reuters.
For now, it's a challenge to pin down in dollars and cents how
companies benefit from such tie-ups, or the value of the gaming
audience. But it's clear that gaming is among the top genres where
YouTube's audience is concentrated.
The 700,000 YouTube videos on "Grand Theft Auto V" have collectively
attracted more than 5 billion views, according to Zefr, which helps
clients like Hasbro Inc and Adidas AG discover influential channels
and personalities.
In a nod to online video's persuasive power, big brands that once
worked ceaselessly to identify and take down copyright-infringing
videos are now open to working with grassroots content makers, Zefr
co-founder Zach James said.
Some publishers allow the independents to use copyrighted
intellectual property and give them resources to produce videos.
Often the publishers will run ads in the videos or ask the content
producers to include links to game trailers, Graham explained.
"Now they've seen the value," he said. "They're happy because it's
free publicity and exposure."
(Reporting by Malathi Nayak; additional reporting by Alexei
Oreskovic; editing by Frank McGurty and Prudence Crowther)
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