About PARQOR

PARQOR is the handbook every media and technology executive needs to navigate the seismic shifts underway in the media business. Through in-depth analysis from a network of senior media and tech leaders, Andrew Rosen cuts through what's happening, highlights what it means and suggests where you should go next.  

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Last Friday I built an essay around a quote “Built to Fail”, a book on Blockbuster Video’s rise and fall. In that book, we learned the rental video market under Blockbuster changed the economics of movie productions because it:

1. Generated more revenues for producers to fund more productions, and 
2. Aggregated the target audience at scale.

Effectively, the additional revenue catalyzed the supply of productions, and Blockbuster’s model catalyzed the demand for those productions. 

Today’s essay looks past the demand side and supply side catalysts for Hollywood’s future lying in the creator economy. As I wrote back in January, “YouTube talent is moving closer to Hollywood’s model than Hollywood is moving toward YouTube’s.” Meaning, YouTube creators are finding faster and cheaper ways to produce legacy media–type content that both audiences and advertisers increasingly consider to be “premium”. 

On a surface level this dynamic mirrors the Blockbuster story:

1. YouTube’s extraordinary scale and growth have generated more revenues for original creators to fund more productions, and 
2. It has also aggregated the target audience at scale (135MM Connected TV (CTV) users, over 200MM monthly users in the U.S. and over 2.1B users worldwide).

So, it would seem the supply side and demand side catalysts are pushing the creator economy into a competitive dynamic with Hollywood and legacy media that is analogous to the “unprecedented independent film movement” of the 1990s. 

But, the lens of YouTube’s 135MM CTV users in the U.S. reflects why the emergence of the creator economy presents two very different catalysts from the Blockbuster story:

1. YouTube creator content now captures a share of advertiser dollars at Upfronts that originally went to legacy media; and, 
2. According to Nielsen’s most recent The Gauge, YouTube is tied with Netflix as one of the top two services with the highest share of streaming on TVs (7.6% of total TV usage).

YouTube is capturing more legacy media ad dollars, which it is sharing with creators, and those creators outperform legacy media content with faster, cheaper and sometimes better content. Instead of catalysts, these dynamics help to reveal how YouTube is changing the economics of streaming to its advantage.

Here are four marketplace tensions to consider.

Key Takeaway

YouTube's marketplace advantages in Connected TV streaming are so much more dynamic than simply supply or demand side catalysts. It seems inevitable that it will win.

Total words: 1,500

Total time reading: 6 minutes