"YouTuber Scale is Hollywood-Level"... Watched 1 Billion Hours Daily on TV Too [Global Focus]

YouTube Dominates TV Viewing and Advertising Market Share
Major YouTubers Invest Millions in Production Costs
Blurred Lines with Hollywood Film Studios

The global entertainment industry's holy ground, Hollywood, is shaking. It briefly enjoyed a golden age with the growth of the OTT market led by Netflix, but as its main revenue sources?subscription services and advertising revenue models?have reached their limits, it has ceded the home front to YouTube. YouTube, which has taken over Americans' TV screens, has begun producing YouTubers who assemble production teams and funding comparable to Hollywood, offering traditional TV program formats. As the film and TV industry stands at a crossroads of decline, the market is accelerating efforts to find a business model where Hollywood and Silicon Valley can coexist.

The Fading OTT Bubble

Hollywood, which enjoyed a golden age alongside the OTT boom, has not been able to recover from its slump. In the second quarter of this year, the number of films and dramas produced across the United States decreased by 40% compared to 2022, and media giants like Paramount Global, responsible for Hollywood jobs, have cut 15% of their workforce in large-scale cost-saving measures. The unemployment rate in the U.S. film and TV industry was recorded at 12.5% last August, but industry insiders agree that the actual figure is much higher when considering those who could not apply for unemployment benefits.

This downturn in Hollywood's film industry was somewhat anticipated. Although OTT platforms such as Netflix, Disney, Warner Bros. Discovery, and Amazon have sprung up rapidly, except for Netflix, they have consistently faced chronic deficits, leading to criticism of a distorted structure. Matthew Belloni, founder of Puck News, a media outlet covering the U.S. entertainment industry, pointed out, "In recent years, the soaring stock prices of streaming service companies like Netflix and Paramount have overheated the content market," adding, "Just a few years ago, there were about 600 productions being made and aired, but at some point, the stock market stopped rewarding that."

YouTube's Invasion of TV

Short-form content such as YouTube Shorts, TikTok, and Instagram Reels has long been considered the only real competitor that traditional media like films and dramas needed to watch out for. The shift of the primary media platform for American adults from TV to mobile environments reflects this well. Bloomberg noted, "Almost everyone under 30 prefers scrolling TikTok over watching movies," and added, "Film industry insiders predict that movies will meet the same fate as radio serials, which have now disappeared."

However, a bigger issue is that YouTube is even dominating the American TV market. Previously, YouTube videos were mainly enjoyed on phones and PCs, but now that they can be watched on TVs as well, YouTube is directly clashing with traditional media companies over TV market share. According to market research firm Nielsen, 150 million people in the U.S. watch YouTube on TV every month, spending a total of 1 billion hours daily watching YouTube on TV. Notably, American TV viewers dedicate more than 10% of their viewing time to YouTube, which is more than any other OTT platform like Netflix.

Another problem is that the overall size of the TV advertising market, a key revenue source for the film and drama industry, is shrinking. TV advertising, which accounted for 33% of the total U.S. advertising market in 2019, is expected to drop to around 20% this year. Meanwhile, YouTube earned $31.5 billion (about 42 trillion KRW) in advertising revenue last year, more than doubling in five years. Netflix hastily introduced an ad-supported tier last May, and its global monthly active users (MAU) for this tier surpassed 40 million, but this is still only about 2% of YouTube's level.

Jasmine Enberg, senior analyst at eMarketer, pointed out, "There is an industry complacency about TV having been the dominant medium for years," adding, "Consumers no longer care much about where they watch videos, but marketing departments have yet to catch up."

The Hollywood-ization of the YouTube Ecosystem

As YouTube absorbs massive advertising revenue, the quality gap between YouTubers' content and traditional Hollywood studios' productions is narrowing day by day. Large YouTubers have emerged who go beyond simple one-person media, assembling teams of dozens and investing millions of dollars in production costs to present content on par with existing TV programs.

Among them, the mega star born from YouTube, MrBeast (real name Jimmy Donaldson), stands out as a unique figure. With over 300 million subscribers, he attracted attention in 2021 by producing a game show mimicking the Netflix drama "Squid Game," offering a prize of $456,000 to ordinary participants. The video has now surpassed 650 million views.

The length of videos, once short, is gradually increasing, and program formats are becoming similar to traditional movies, sports, dramas, and TV shows, leading to a rapid expansion of YouTube's investments. Over the past three years, YouTube has paid creators and video production companies an average of $23 billion (about 31 trillion KRW) annually. This far exceeds Netflix's planned $15 billion investment in content production this year. To ride this YouTube growth wave, some OTT companies are collaborating with star YouTubers on content co-productions. For example, Amazon Prime Video is reportedly producing the reality show "Beast Games," where contestants compete for a $5 million prize with MrBeast.

The Future of Hollywood and Entertainment

While YouTube dominates the TV and advertising markets and some people even consume movies through YouTubers' summary videos rather than theaters, there is also optimism that the decline of the traditional entertainment industry is an overreaction. The diagnosis is that the way people consume entertainment has changed, but the overall scale of entertainment consumption has not decreased. Bloomberg emphasized, "Despite competition from YouTube, TikTok, and video games, the time people spend watching premium video content (excluding content produced by YouTubers) has steadily increased over the past decade," adding, "The decline in cable and satellite TV ratings has been offset by increased streaming viewership."

The coexistence theory between Silicon Valley and Hollywood is also gaining traction. IT companies from Silicon Valley like YouTube and TikTok are competitors to Hollywood studios but also serve as channels that maximize the promotional effects of their works. In fact, many actors, producers, and comedians communicate with the public through YouTube, TikTok, and Instagram, raising their profiles, and films or documentaries featuring their stories have been produced on platforms like Netflix.

Bella Bajaria, Netflix's Chief Content Officer (CCO), said, "I don't agree with the opinion that young people don't watch movies and TV because they only look for short videos," adding, "If there is a suitable story that resonates with young audiences, it can be loved anytime." She also added, "We compete with YouTube for time and attention, but at the same time, our services positively influence each other."