San Franciso: To imagine how YouTube might one day become a money-spinner for content producers, consider the power of the irreverent video gamer and online star PewDiePie over his young, free-spending audience. 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.
"It's incredible that YouTube personalities are coming up and I think it can only grow." said Min-Liang Tan, Chief Executive of San Diego-based Razer (Gaming hardware company). 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.
Walt Disney Co also 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.
In 2013, 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.
The Gaming content on YouTube - anything from reviews and video of gameplay to unboxing of hardware, is undoubtedly drawing a disproportionate number of eyeballs.This has in fact sponsors and potential buyers excited.
'Subscriptions across YouTube's hundreds of video game channels tripled in 2013 from 2012,' said Erica Larson, Head of Media and Entertainment-gaming at YouTube. 'Some of the more popular content makers rake in six-figure annual revenues,' added further.
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,' asreported in the Wall Street Journal on Monday.
