• YouTube Talent War Rages With Millennials' Viewing Up For Grabs

    The WSJ is reporting today that YouTube is now offering some of its most popular video creators bonuses in exchange for signing exclusive multiyear deals. The new offers are on top of previously reported deals to underwrite programming for the same creators. All of this is happening primarily in response to pitches ex-Hulu CEO Jason Kilar is making to the same YouTube creators, to provide his new company Vessel with an exclusive 3-day window for these creators' new videos.

    The YouTube talent war is raging because the viewing behaviors of millennials - the primary audience for this type of programming - is up for grabs. The most compelling evidence of this came in last week's Nielsen Q3 '14 Total Audience report. Based on my calculations, live TV viewing by 18-24 year-olds (the core millennial segment) dropped by nearly 20% in Q3 '14 vs. Q3 '13. The reduction represented over 4 hours per week of viewing time, thereby dropping live TV viewing to approximately 17 hours per week, easily the lowest of any age group Nielsen measures.

    Anyone who knows an 18-24 year-old (or those on either side of this age span), is well aware of how fragmented their viewing has become, with YouTube and Netflix having emerged as their top 2 alternatives to traditional TV. This is exactly the dynamic that Vessel has zeroed in on: to deliver the best of YouTube early, exclusively and for free. If it can accomplish its mission, it will also have an extremely attractive audience for brand advertisers which are more challenged than ever to get their messages across to millennials.

    Even as Vessel tries to get a foothold, Facebook is also becoming a bona fide YouTube contender, leveraging its massive audience and sharing power. In September, Facebook said its video views pushed above 1 billion per day, with 65% of them on mobile devices. One Facebook success that gained a lot of notice was Beyonce's VMA prep video, which drove 2.4 million views in the first 4 hours on Facebook and just a few thousand on YouTube.

    It's not just content creators that are seeing success on Facebook either. Last week, Heineken USA senior media director of marketing Ron Amram told Adweek that, based on his brand's experience, "YouTube and Facebook are equal players now, or at least close to it." Facebook's optional autoplay feature (and now its autoplay video ads) are also innovations (love 'em or hate 'em) in how video is delivered and monetized. And Facebook's Audience Network, coupled with its acquisition of LiveRail, means a much broader push for 3rd party video monetization.

    Add it all up and 2015 is shaping up to be a battleground for top online content creators' attention and for online video advertising. Millennials' viewing behavior will continue shifting and ad dollars will follow along. Conversely, for live TV, challenges will only increase in attracting and retaining millennials. A new world order is clearly emerging.

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