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Google hoping an exclusive esports splash will take YouTube Gaming to the next level

A view of The San Francisco Shock and Vancouver Titans will face off at the Overwatch League Grand Finals 2019 at Wells Fargo Center on September 29, 2019 in Philadelphia, Pennsylvania. (Bryan Bedder/Getty Images for Blizzard Entertainment)

  • Google acquires exclusive media rights to three Activision Blizzard properties
  • Overwatch League, Call of Duty League and Hearthstone esports no longer on Twitch
  • YouTube Gaming gaining ground on Twitch in all key metrics

The growth of Google’s YouTube Gaming platform was one of the most underrated esports and video gaming success stories of 2019. The platform saw a 46-per-cent increase in watched hours from Q1 to Q4, as users spent over 900 million hours watching live-streamed gaming content during October, November and December.

YouTube Gaming has a long way to go to catch Amazon-owned platform Twitch, but if Q4’s trend continues, Google will continue taking market share from Amazon in the world of live video game streaming. Watched hours on Twitch declined by more than 250 million from Q3 to Q4; YouTube’s increased by about 230 million.

Industry experts believe these trends are directly related and will continue in 2020 – not least due to Google’s blockbuster deal with games publisher Activision Blizzard for exclusive media rights to the Overwatch League and the brand-new Call of Duty League.

Across the Overwatch League and individual streamers, Overwatch accrued a total of about 250 million watched hours on Twitch in 2019. Most of these hours will now transfer to YouTube Gaming along with at least another 100 million hours generated by live Call of Duty: Modern Warfare content.

For Ryan Wyatt, YouTube Gaming’s global head of gaming and VR, acquiring media rights to high-profile esports competitions is just another way of serving YouTube Gaming’s 200 million users. The Overwatch League was exclusively shown on Twitch during 2018 and 2019, making YouTube a secondary platform for content related to the game. From this year onward, Wyatt is happy that will change.

“We just need to make sure that when our users come to YouTube, they have a broad diversity of gaming content available on the platform,” Wyatt says. “It’s very clear that our VOD business is sizeably bigger than live, and breadth of content for gaming exists on YouTube; it’s already there. But we felt there was opportunity to ramp up our live gaming effort. I think it had more and has more to do with that than it does about live gaming growth or accelerating growth. It’s about giving diversity of content to the users on the platform.”

The differences between ramping up live gaming content and live gaming growth are subtle, to say the least. But Wyatt insists the deal is less about competing with Twitch and more about making YouTube Gaming a better platform for its users.

“Looking from the outside in, it’s very clear that we just have our heads down. All we need to focus on is our core principles: do right by the gaming publishers, do right by your gaming creators, and do right by your users. You really don’t need to pay attention to any outside noise. If you just stick to those three things, you’ll be just fine in the direction that you’re going.”

A view of The San Francisco Shock and Vancouver Titans will face off at the Overwatch League Grand Finals 2019 at Wells Fargo Center on September 29, 2019 in Philadelphia, Pennsylvania. (Bryan Bedder/Getty Images for Blizzard Entertainment)

Exclusivity

YouTube’s deal with Activision Blizzard might appear engineered to gain ground on its rivals, but there is some merit in Wyatt’s claim. YouTube has been happy to agree non-exclusive deals for esports properties since it began acquiring rights – the only exception being an exclusive agreement with tournament operator ESL for rights to its Pro League in 2017.

Non-exclusive deals are the norm in esports as most rights-holders and teams prefer to secure maximum exposure for sponsors. In the case of YouTube’s exclusive deals with Activision Blizzard and ESL, it is understood the exclusivity of the agreement was due to rights-holder preference, not YouTube’s insistence.

Both the Overwatch League and the Call of Duty League are closed franchise leagues with guaranteed revenue-sharing initiatives. Several team owners also own professional sports teams in the US, where exclusive media rights deals are the backbone of their income.

However, the Overwatch League’s decision to agree an exclusive deal with Twitch for its previous two seasons has arguably stunted its viewership growth. According to data collected by Nielsen, the Overwatch League attracted a global average of 313,000 viewers for the 2019 regular season and an average of 1.12 million for its Grand Finals. The finals were also shown on US commercial broadcaster ABC, boosting numbers considerably.

But despite an 11-per-cent growth in 18-34 viewership year-on-year, the league averaged just 95,000 viewers in the US during the 2019 regular season.

This is partly due to the league’s being in an early stage of development, but also to Twitch’s relatively narrow audience of serious gamers. An exclusive deal with YouTube provides a degree of financial security to the leagues and teams as well as the opportunity to reach a mainstream audience of a billion YouTube users.

I can tell you there’s a lot of enthusiasm because of the size of YouTube Gaming: the idea of being able to introduce esports to more of a mainstream audience, and that mainstream very much being found on YouTube,” Wyatt says.

“We have a world class live platform, we have some feature sets that aren’t available in any other platform, such as DVR and the ability to rewind if you’re late for a live match. And so that, on top of the audience, makes it really exciting for leagues to want to lean into YouTube. That’s why you see so many of them non-exclusively on YouTube, and now some exclusively as well.”

The Call of Duty League will also benefit from appearing exclusively on YouTube as opposed to Twitch. Call of Duty content has been a staple of YouTube’s gaming community since Call of Duty 4: Modern Warfare was released in 2007, and the game itself reaches a more mainstream audience than hardcore first-person shooters such as Counter-Strike.

Wyatt, a former play-by-play commentator (known as a ‘caster’ in esports) for professional Call of Duty tournaments, knows all about the esport’s potential.

“Nothing in esports is guaranteed, but I do believe that there is a tremendous opportunity for Call of Duty to hit numbers like they’ve never hit before on YouTube,” Wyatt says. “Call of Duty has always been a staple for YouTube gaming on the platform. We can go back all the way to nine or 10 years ago to Call of Duty 4, when people were uploading montages and clips. It’s always been a really important part of YouTube.”

Playing catch-up

While YouTube’s VOD service is streets ahead of Twitch, its live-streaming experience is basic by comparison. Twitch has developed a unique culture of viewing via its highly interactive chat features, item giveaways and viewer polls that are integrated into the broadcast.

At present, YouTube’s live chat features are fairly basic and its ability to give away in-game items is limited. On Twitch, users can link multiple online gaming accounts with Amazon Prime in order to receive free items on console or PC. At present, YouTube only allows users to link their account with Epic Games, publisher of battle royale game Fortnite.

The exclusive deal will undoubtedly mean some fans will be unhappy about watching Overwatch and Call of Duty on an unfamiliar platform with fewer interactive features. Wyatt is aiming to assuage those fears by improving YouTube’s live experience for the better.

“When users are making a decision to not play the game because they want to watch the game, it can be really fun for them to engage in drops and voting polls. We’ve made strides there and we’ll continue to do that. I think there’s a future where you see this stuff on the Overwatch League and Call of Duty League.

“We’re innovating and building on our live product. That’s important to our creators and our users. Bringing in great esports content is great for our publishers. Each one of our decisions is being made for the benefit of those three buckets and if we keep doing that, we don’t really have to worry about anything. We’re going to keep our head down and make sure we’re doing right by them.”

A view of The San Francisco Shock and Vancouver Titans will face off at the Overwatch League Grand Finals 2019 at Wells Fargo Center on September 29, 2019 in Philadelphia, Pennsylvania. (Bryan Bedder/Getty Images for Blizzard Entertainment)

The fine print

The Overwatch League’s previous exclusive media rights deal with Twitch was reported to be worth $90m over the course of 2018 and 2019, but industry experts and insiders have told SportBusiness that this $90m incorporated expected earnings from an advertising revenue share, as well as the cash value of in-game items given away to viewers. Experts estimate that between 25 and 30 per cent of that $90m headline figure was a media rights fee.

The same experts believe that as the new deal contains exclusive rights to the Overwatch League, Call of Duty League and tournaments for strategy card game Hearthstone, a strong media rights fee increase is highly likely. However, as each property has an allocated fee within the deal, insiders believe it is unlikely that the Overwatch League has earned an increase in guaranteed media rights revenue.

Whether or not this is the case, the league has an opportunity to attract greater viewership on YouTube and thus earn more from its advertising revenue share. Matches from all Activision Blizzard leagues will also appear on its own wholly owned platforms such as MLG.tv, but these platforms will use embedded YouTube video players on its sites to maximise the amount of ad revenue it earns within the deal.

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