Making the Gaming Content Industry Better for Creators
Gaming creators are paying massive rent to content platforms, giving up 50% or more of their earned revenue. We aim to do better. Here's how
Tue Nov 15 2022
7 min read
Gaming is peak culture. Since the foundation of video gaming as mainstream entertainment in the late 20th century, the past decade has given rise to an ever-expanding array of new gaming genres, dynamic creators, and immersive experiences. The gaming industry is now valued at nearly $200 billion dollars. But amidst this explosion of awareness and all that $$$, it’s clear that the monetization model for creators is busted.
Gaming creators are paying massive rent to content platforms, most giving up 50% of their earned revenue to these companies. The content ecosystem is extremely unbalanced, enriching the mega-corp platforms at the expense of creators and their loyal viewers, with few alternative choices, and no input on community and platform decisions.
A growing demand for short-form content
While gaming content has lived on video sharing websites for some time, streaming platforms transformed video game watching from a passive, solitary experience to an active social event. The result is exciting new forms of community building, engagement, and monetization. That being said, the industry’s disproportionate focus on long form content over on-demand, short-form content has created a lopsided “winner take all” creator economy that ignores a significant segment of gaming fans.
According to a 2020 Google survey, 34% of gaming content viewers do not watch live streams and prefer on-demand videos. At the same time, it’s difficult for lesser-known streamers to be discovered, given viewers usually browse for specific creators and algorithmic recommendations that often de-prioritize new creators with smaller followings.
As long form content continues to grow, short-form content will grow in response. The desire to “catch up” and “see what you missed” by fans will always be a need, especially as fans have less hours dedicated to watching content. Time and attention are at a premium. And short form content is winning for a lot of content genres, and gaming isn’t far behind. There’s a growing need for a dedicated home for short-form gaming content.
Fragmented gaming content paired with poor discovery
The gaming ecosystem has a wide array of quality creators, yet it’s still difficult for gaming fans to find good short-form content on existing platforms.
Twitch and YouTube are currently the leading platforms for video gaming content, with Twitch leading in live-streaming and YouTube leading in on-demand content. Both are primarily invested in the “long form” content — due to both being focused on advertising revenue — and don’t focus on creator clips: quickly consumed videos featuring key moments in just 15–60 seconds.
These large platforms cater to a wide range of creators because they simply want content to advertise against. Discovery on both platforms make it difficult for viewers to come across new content outside of the gaming genres and creators to which they have already expressed interest. As a result, viewers are siloed and often miss out on new gaming content, while many creators struggle to be discovered. For creators, the industry keeps getting bigger, but the top participants often reap all of the benefits.
What about Instagram? When searching “League of Legends” and “Valorant” on Instagram, the user is presented with these experiences.
Both searches show a variety of gaming related posts. Few posts are of video content, with even fewer coming from quality gaming focused creators and streamers. Discovery is poor because curation comes from low quality tags and posts. Anyone can be a creator and post into these fields. Instagram’s treatment of their content forces creators to be a part of their algorithm in order to gain traction. In turn, gaming creators trying to make a living are having to compete with random game memers and other tangentially related content.
What about the current king of short form content, TikTok? TikTok has a similar issue to Instagram. Anyone can post and game their algorithm, leading to a mixed bag of results including new content from established TikTok creators and random trending content on their platform.
Unbalanced value sharing between users and content platforms
Twitch and YouTube rely on creators to produce engaging content and attract viewers, but these businesses only offer marginal compensation for their creators’ efforts based on traditional subscription, tipping, and advertising models. As a result, it’s difficult for smaller content creators to make significant money even if they reach Twitch Partner status (or its equivalent on other platforms). Considering how revenue sharing works, these platforms effectively end up catering to 0.01% of their creators.
Most streamers rely on account subscriptions and tipping for their baseline in-platform income, while VOD creators depend on a mixture of advertising and membership revenue sharing. In both instances, platforms like Twitch and YouTube take roughly half of their content creator’s top-line revenue. Most creators must seek out additional revenue streams such as brand sponsorships and affiliate links, which can be distracting and dilute the creator’s ability to engage with fans.
The fan experience suffers as well. Fans aren’t able to capture any of the value they provide to creators, the platform, and the communities they help build. For example, when you subscribe to a creator on Twitch or become a member on YouTube, the benefits are hand-wavy; both platforms don’t allow creators to offer specific incentives or benefits outside of basic emoticons and chat badges. It’s entirely on the creator to develop these incentives while the two platforms take their cut.
And at the platform level, recognition of fan patronage is often a hit or miss experience. Remember that time you gifted 5 subs to a streamer and they missed the chance to shout you out? Yup. It happens all the time.
This tension presents a problem. The viewer has spent their hard earned cash and time supporting their creator and hopes to be acknowledged. At the same time, the creator has to endlessly develop methods to encourage fans to watch and spend more. As a result, creators end up prioritizing their highest and most consistent spenders because they need to sustain their revenue. Reaching a regular, significant level of spend is a feat few fans can realistically achieve.
While creators need sustainable monetization in order to be successful, the fans who watch 100+ hours but only tip a few bucks can have a significant impact on a creator’s success. They should be rewarded too.
Meanwhile, the traditional content and social media platforms continue to take their hefty share and are always optimizing for the next economic tool to push on creators regardless of a creator’s desire to use. Many of these products are at the expense of more direct monetization between the creator and a fan.
In 2020, TikTok announced their $200 million creator fund, set to launch the following year. Since then, 2020 and 2021global revenue has been an estimated $91.4 billion combined. This means that a whopping .22% of total revenue is going back to creators and only after the community helped build the platform. To this day, only select creators have access to monetization features such as tipping, the fund, and their sponsorship marketplace.
Instagram is planning to launch a sponsorship marketplace and allow creators to sell merchandise in the near future. Instagram generated approximately $26 billion in revenue in 2021, and still refuses to share any of the top-line advertising revenue with creators outside of participants in their IGTV product.
Creators need better ways to monetize as platforms benefit from their work. In both examples, the companies withhold revenue and are slow to develop features for creators. Gaming content creators are also not a focus for either platform. Who’s building for the gaming community?
FreshCut was born out of our love of gaming. We’re gaming content and industry vets who want to make a better product for creators and the gaming community. We realize gamers contribute so much to the major content-sharing platforms they populate and are not being fully rewarded or given their fair share. It’s important to iterate on the successes we’ve seen in the market while pushing back against the specific frameworks and features that are resulting in a lopsided “winner takes all” relationship between not only users and platforms, but established influencers and new creators as well.
The only way for this vibrant industry to keep growing in a sustainable way is to give content creators a bigger slice of the pie and to develop features for viewers to capture the value they contribute to the ecosystem. This doesn’t just mean rolling out more generous revenue-sharing models or applying the same models across different products. FreshCut’s primary motive is not only to create the best ecosystem to share and discover short-form gaming content, but also to give all of our users actual decision-making power over how our platform and community operates. Given the great lengths gamers go through to support their favorite games and creators, they deserve a better experience, and FreshCut is building that solution.
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