Late last week, Thomas Owadenko, CEO of Octoly, a marketing software company that released a report on YouTube and video games last June, noted that all-time YouTube views of fan-created Minecraft videos are now up to 47 billion, an increase of 16 billion just since the report was released. Underscoring how robust Minecraft's fan community is, just 228 million of these views occurred on Minecraft creator Mojang's own YouTube channel.
Minecraft is a true "unicorn," a one-of-a-kind video game empire built with virtually no paid marketing, which partly explains why Microsoft was willing to pony up $2.5 billion for the company in September. But while Minecraft itself may be a unicorn, its success on YouTube says a lot more generally about the video industry's new rules - including serious challenges for industry incumbents.
I've actually had a front-row seat to the Minecraft phenomenon, as my 12 1/2 year-old son - and most of his good friends - are avid Minecrafters. While they enjoy using Minecraft, they also avidly watch many of the most popular Minecraft YouTubers' videos (Owadenko notes Minecraft has heavily encouraged fans to create videos). They watch huddled around my son's iPad mini or on the iMac, in the shadow of our 60-inch flat screen TV, which they never turn on.
It is precisely this behavior that is contributing to audience declines among kids' TV networks. In fact, just yesterday I reported on Bernstein Research which found a 16% drop this quarter for kids' TV networks, much worse than the declines at other broadcast and cable TV networks. Bernstein pins a lot of this on SVOD substitution - and on this point I should note that for my son, in addition to watching Minecraft videos, binging on "King of the Hill" episodes on Netflix has recently become a favorite pastime.
A lot has been written about the "democratization of video" over the past few years - the idea that YouTube and other platforms have leveled the playing field for upstart video creators to profitably build their audiences and brands. This is certainly true for Minecraft's top YouTubers, who have built huge followings that are well-monetized through advertising (reportedly earning the creators millions in annual income).
A favorite creator of my son's is "CaptainSparklez," the handle for Jordan Maron, a 22 year-old Californian with nearly 8.2 million YouTube subscribers. The "Draw My Life" video Maron posted, which has been watched over 3.8 million times (see below), particularly intrigued my son, who affiliates with Maron and other Minecraft YouTubers to a far greater extent than he does with any traditional Hollywood celebrity. This certainly aligns with research from Variety that found 6 of the top 10 most influential celebrities among American teens were all YouTubers.
One of the big appeals for my son and his friends of watching Minecraft YouTubers is LEARNING from them, especially how to build more complex types of projects. Compare this with traditional TV aimed at kids, which is purely entertaining and often mindless. This is a key reason why many parents have embraced Minecraft while continuing to place strict limits on TV viewing.
In sum, kids like my son are taking control of their viewing, accessing new platforms like YouTube on a range of new devices, and watching new forms of "entertainment" completely outside the traditional TV ecosystem. Of course advertisers can't ignore these shifts, which is partly why TV ad spending was flat-to-down in Q3 for many networks, while online video is booming.
No doubt much of this is familiar to all of you who have kids at home. It helps crystallize how challenging the landscape has become for incumbent TV networks, especially those targeting kids. How well these networks adapt to video's new rules will determine how long they remain successful.