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Amazon Has YouTube Envy

Amazon Has YouTube Envy

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YouTube has become synonymous with online video and the lucrative advertising that it commands. Amazon.com Inc.’s Twitch streaming site is the go-to place for the much smaller audience of video gaming enthusiasts. Now, in a bid to grab a larger slice of the online advertising pie, Amazon has decided to aggressively broaden the programming on Twitch to take on its video rival.

Amazon in recent months has been pursuing exclusive livestreaming deals with dozens of popular media companies and personalities, many with large followings on YouTube. Twitch is offering minimum guarantees of as much as a few million dollars a year, as well as a share of future advertising sales and subscription revenue, according to several people who’ve been contacted by Twitch.

The company has approached everyone from lifestyle influencer Gigi Gorgeous to actor Will Smith about streaming live. While some talent has resisted a few of Amazon’s terms, such as a minimum number of hours of livestreaming per week, a few deals have closed. Tanner Braungardt, a prankster from Kansas with 4 million subscribers on YouTube, for instance, has also signed onto Twitch. And the National Basketball Association struck a deal to stream minor league games on the service. “There will be a steady drumbeat of lots of new content we’re bringing on,” says Michael Aragon, Twitch Interactive Inc.’s senior vice president of content. “We’re growing well, and that makes us an attractive destination for people looking to do new things in live, interactive entertainment.”

For now, it’s a David vs. Goliath battle. YouTube, the largest advertising-supported video site in the world, has about 1.9 billion monthly viewers; Twitch gets about 15 million a day. But the Amazon unit gives creators multiple ways of making money, including paid subscriptions (a feature YouTube added in response), and offers advertisers the appeal of a live, engaged audience. Amazon, which saw its ad sales in the first quarter exceed $2 billion for the first time mostly by selling “sponsored products” slots during product searches, analysts estimate, has already become a credible contender in online advertising to Google and Facebook Inc.

Game On

 

Data: ComScore

 

At a recent staff meeting, Twitch Chief Executive Officer Emmett Shear set a target of $1 billion in ad sales for Twitch, according to three people present. That’s more than double its current sales. Twitch’s key advantage, besides being live, is its popularity among young men who tend to be resistant to ads. The average Twitch user has stopped paying for cable TV and employs technology to block advertising across the internet. But hundreds of thousands of these hard-to-reach viewers tune in daily to watch top video game streamers, such as Ninja, Twitch’s biggest star.

YouTube has tried to blunt Twitch’s efforts by offering big payments to some of its top creators if they agree not to make exclusive deals with other sites. “YouTube is pretty nervous,” says Chad Stoller, chief innovation officer at media agency UM Global. YouTube declined to comment for this story.

Rafi Fine, who with his brother runs some of the biggest channels on YouTube through their Fine Brothers Entertainment, has had discussions with Twitch officials about making original series. Fine says he can’t imagine abandoning YouTube, but Twitch might offer his company a better home for live programming—and more money. “Twitch has a way to be not a killer, but a competitor to what YouTube does,” he says.

The vast majority of Twitch’s visitors come to watch others play video games. While e-sports are booming, many marketers still associate gaming with nerds who live in their parents’ basements. Twitch didn’t let users post videos that weren’t gaming-related when Amazon paid almost $1 billion for the company in 2014. A year later, Amazon introduced Twitch Creative, which helped nongamers such as chefs and artists to stream live. The site has since hosted livestream marathons of old episodes of Saturday Night Live and celebrity chef Julia Child, plus some live sports. There’s no better sign of Twitch’s interest in nongaming video than its popular chef streamer Christine, a 32-year-old Californian who films herself baking and cooking five days a week for a show called CookingForNoobs. Her rules: Be positive, avoid cursing, and don’t feed the trolls.

“Few brands are excited about reaching an audience of hardcore gamers,” says Justin Warden, CEO of Ader Inc., a marketing agency that specializes in e-sports. “More brands are excited about working with an influencer or personality.” Ader helped Walt Disney Co. market the DVD release of Black Panther on Twitch and is signing clients who specialize in anime and card playing, plus gamers as adept at humor as a joystick.

Two of the fastest-growing genres on Twitch are livestreams of TV shows and “IRL,” or in real life, videos—where posters welcome fans into their world for a few hours at a time. IRL videos are an unedited version of the video blog, or vlog, one of the dominant genres on YouTube.

Few people can marshal their fans to buy books, tickets, or makeup like online influencers, the youthful vloggers and comedians who rule YouTube. So Amazon has an added incentive for wooing them to Twitch. Still, rivals have attempted to compete with YouTube for years, with little to show for it. Verizon Communications Inc. struggled to attract users to its video app Go90 before folding it this year. Facebook has pursued online creators for its Watch video section, but it isn’t yet a major source of revenue for most online talent.

Yet YouTube’s grip on the creators has never been more tenuous. Its investments in new areas such as TV and music have left some creators feeling unloved. And its crackdown on which videos are eligible for ads has reduced revenue for some of its top stars. “YouTube has been confusing the creator community,” says David Tochterman, who represents creators who work with both YouTube and Twitch. YouTube’s constant tweaks to the algorithms that power its site have a big effect on views for YouTubers, who can no longer rely on the site to be their sole source of revenue, he says.

Nichole Boyd started posting YouTube videos in 2010 and has about 500,000 subscribers to her channel, which features home cleaning and organization tips. YouTube advertising remains her largest revenue source, but like many influencers, she wants to cultivate other platforms so sudden changes to algorithms or rules don’t kill her business. People directed to Amazon from her YouTube posts spend as much as $60,000 a month at the online retailer, and she gets a commission on everything they buy within 24 hours of visiting Amazon through a link from her channel. “I do pretty good there because a lot of the products I have in my videos and use in my home are sold on Amazon,” she says.

Amazon reached out to her earlier this year about creating two videos a week for a kind of home shopping network-style program with several other online influencers, Boyd says. She’s interested in the idea—and likely so are YouTube executives. —With Spencer Soper

BOTTOM LINE - Amazon’s Twitch live-video service attracts 15 million daily visitors, mostly to watch gamers. Amazon is trying to woo YouTubers—and the ad money they draw—to the site.

https://www.bloomberg.com/news/articles/2018-08-15/amazon-wants-twitch-to-be-a-youtube-competitor








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