Felix Kjellberg is a star on YouTube, the video sharing website owned by Google (an investment in the Forager International Shares Fund). Better known by his handle ‘PewDiePie’, I’d never heard of the 26 year old Swede until he made a guest appearance on South Park a few weeks ago. His ‘Let’s Play’ video logs (vlogs) on YouTube have 40 million subscribers and a typical video he releases might have 1 million views within a day or two, and 10 million within a few weeks.
What draws in such crowds? Damned if I know. To quote Murtaugh from Lethal Weapon, I’m too old for this shit. Most of PewDiePie’s videos involve a ‘playthrough’ of a new video game (you’re watching the video game as he’s playing it), with a smaller screen in the top corner documenting Kjellberg as he plays the game, making silly comments and being all Swedish. Anyhow, the kids love it.
Wanna know how much Kjellberg reportedly earned this past year, paid by product manufacturers and ad revenue sharing with Google? US$12m. That’s not all that far behind the highest wages in the history of commercial television, such as the cast of Seinfeld, Friends and Charlie Sheen when he was only marginally off the rails.
PewDiePie’s not the only jerk raking in millions from YouTube channels. There’s a whole bunch earning $2-10m. Good luck to them.
There was a time when entertainment rainmakers were on free-to-air television. Those days are, for the most part, over. Free-to-air is dominated by unpaid anybodies with a dream and a pair of dancing shoes, vocal chords or a frying pan.
The rainmakers these days are the producers, directors and actors involved in well-made series that generally come to us through some form of paid television—cable, pay-per-view, Netflix etc. But they’re also, increasingly, the YouTube stars reaching younger audiences through ad revenue-driven formats like PewDiePie’s.
That suits Google perfectly. And the best bit? Their ad revenue sharing model means Google takes on none of the risk that studios had to endure to create shows like Seinfeld and Friends. If the world wakes up tomorrow and finds PewDiePie passé, Google won’t be stuck paying out on some contract, and instead will be sharing revenue with whomever the kids become infatuated with next.
Hey, maybe I’m not too old for this shit after all.
Ready to invest?
Visit this page for more information on how to invest with Forager.
Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.