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Vidcon 2014: A Look at the Heart of the Rapidly-Growing YouTube Industry

By  +Follow July 2, 2014 4:07AM
Tickers Mentioned:

VidCon 2014, YouTube, Kian Lawley, Maker Studio, Fullscreen, video sharing, online video industry, advertising on YouTube

“Is that a Beatle?” joked a mom as screams from already exuberant teenage girls reached a peak as a new star approached a lengthy meet-n-greet line. You’d think. But this particular uproar, one of many collective shrieking sessions that often led to hundreds, if not thousands, of teenagers collectively swooning, was caused by YouTuber Kian Lawley.

Wait, who?

A New Generation of Stars

That was my question which was quickly answered by two 15-year-old girls in line next to me. Kian Lawley is 1/7 of the group of the collaborative group o2l, or Our2ndLife. What Youtubers call a “Collab Channel” is a channel that has multiple people running it. o2l is run by 7 boys that met making videos on YouTube (GOOG) , and now produce them together. And just one of them alone amassed a Justin Bieber level frenzy along with a huge line.

Anaheim is undeniably a place for lines. But the home of Disney had a different popular yet line-heavy attraction drawing in crowds this past weekend, Vidcon. Lines came in many different forms. Lines to meet or take a photo with your favorite YouTube stars, lines to get into panels, lines formed outside by YouTubers holding impromptu photo ops…

But, often, a long wait is the sign of a good reward. And clearly, fans thought the wait was worth it. Sure there were tears. When meet-in-greet lines were cut off by security because they went over capacity, particularly avid fans cried and complained about their five hour flights and six hour waits all for the sake of meeting their favorite YouTuber gone to waste.

But, regardless of some disappointments, most fans were amped, running around the convention halls, following the excited screams, hoping to get a glimpse of their favorite star or, even better, a selfie. Measuring in terms of insane fangirling, Vidcon was clearly a hit.

A Rapidly-Growing Convention for a Rapidly-Growing Industry

So what exactly is Vidcon? Vidcon is self-identified as the world’s premier gathering of people who make and are fans of online video. The first Vidcon took place in 2010, founded by “Vlogbrothers” Hank and John Green. John Green has been increasingly in the public eye. Along with being a YouTube Creator, his bestselling novel, The Fault in Our Stars, was just adapted for the big screen and met with rave reviews and box office success.

Vidcon itself has also become increasingly mainstream. Back in 2010 when the Green brothers first Vidcon hosted less than 1500 people. An estimated 20,000 people attended this year’s convention. Since its conception, Vidcon has exploded, keeping pace with an equally fast-growing industry.

The popularity of YouTube is no secret. More than 1 billion different users and over 6 billion hours of video are watched every month on YouTube. Mega hits regularly reach hundreds of millions of views. Gangnam Style by K-Pop singer Psy, the most viewed viral video in the world, has over 2 billion views.

Most of the people at Vidcon were fans, but there was also a fair share of industry professionals, creators, and wannabe creators. In the exhibitor hall you could find MCNs (Multi-channel-networks), start-ups, and seemingly unrelated brands, such as Kia Motors, Taco Bell, and HGTV (Home and Garden Television).

Why? There’s money here.

The Future of Video Content, and its Profits, is at VidCon

A large presence was occupied by MCNs. Multi Channel Networks offer creators funding, cross-promotion, talent-management, etc. in exchange for a percentage of ad revenue. Maker Studios, was just purchased by Disney (DIS) for $500 million dollars, and its competitor Fullscreen remains one of the largest independent networks in the business.

“(Fullscreen) is not just in the YouTube industry but the spheres of influence industry,” said the Director of Talent Operations at Fullscreen, Phil Ranta. “People who are influential on digital properties generally have the same type of audiences, engaged, lean-in, and clickers. But nobody really tried to go in and crack the code until a few years ago”

Many more mainstream brands are recognizing the power YouTube has to upset traditional forms of media and seeing it as an alternative, for both content production and advertising. They are also recognizing YouTube audiences in general as a demographic fit for their products.

Biggest brands have tried to get into YouTube before, but most of them haven’t had much luck. The problem many brands have had on YouTube so far is not catering to their audience. YouTube users will only watch what they want to watch. Successful companies have taken a different approach.

“Instead of trying to change audience behavior they embraced audience behavior” said Ranta, “On YouTube it’s all about forming sub cultures so the audience is going to tell you what they want.”

First Rule of Online Video: Don’t Underestimate the Power of the Cat Video

When most people think of YouTube, they think of silly, cute cat videos. Friskies, the Cat food brand, has taken that to a whole new level. Friskies’s YouTube channel is pretty successful too. This channel produces content that effectively advertises for their product, but isn’t a television commercial. Viewers actually choose to watch their content, because it’s entertaining. Friskies even had a presence at the celebrity photo ops with their new face of their brand, Internet sensation and “celebrity cat”, Grumpy Cat.

Another “celebrity cat” that has appeared in Friskies YouTube videos is Nala Cat, who got her start on Instagram. Grumpy Cat herself started out on Reddit, and then became an extremely popular meme. On June 11, 2014, Lifetime announced that Grumpy Cat will star in a movie entitled “Grumpy Cat’s Worst Christmas Ever”, to be released this holiday season.

What these cats, and many people in the industry have that makes them so successful is cross platform integration. Many YouTubers, such as comedic duo Smosh, have a website, songs on iTunes, merchandise and an app.

“From the time I met the guys,” said Barry Blumberg, president of Smosh, “we always had a belief that a business built on the back of a single partner was a dangerous place to be, so we always wanted to have multiple revenue streams.”

YouTube: A Platform to be Loved by Creator and Advertiser Alike

Creators do make money from ads on YouTube, with a 60/40 split. Although YouTube is the only social network that shares revenue with creators, most still look to make money in other places as well and broaden their presence in other forms of media. YouTube itself used Vidcon to announce several new features. These features include a virtual tip jar for creators, fan translated subtitles and mobile creator apps.

The online video production industry has undoubtedly been growing. With the further monetization of the industry and the increasing fame of its creators, Vidcon and the YouTube industry in general is expected to continue to grow in terms of money, popularity and influence in upcoming years. 


DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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