Analysis, Gaming

Will Nintendo’s New YouTube Monetization Policy Backfire?

Yesterday Nintendo (TYO: 7974) announced the Nintendo Creator’s Program, an initiative that “shares” a portion of advertising revenue with YouTubers who showcase the publisher’s content.

Under Youtube’s copyright policies Nintendo previously took in all ad profits generated by all user-created content that featured footage of their games, across all generations–from NES to Wii U.

The new program opens up an avenue for YouTubers to finally earn from their Nintendo videos, and on the surface it looks like a good idea. But at a closer glance the new policy looks like it goes against the viral nature of YouTube in an attempt to earn revenue.

With the new model the publisher pays out 70% of ad revenue to registered channels and keeps 30% for itself. That’s not such a bad split. But the real problem is how long it takes to be paid.

Nintendo's Creator Program

The new policy clearly outlines restrictions, rules, and rather unappealing red tape for interested YouTubers.

According to the FAQ, it can take “up to two months for payments to be sent to your PayPal account”, meaning Nintendo doesn’t pay out until it gets its revenue. And like most agreements of this nature, Nintendo holds the right to adjust these rates at any time.

Those are hardly agreeable terms. But if you want to earn cash on your Nintendo-based content, you have no choice.

Ontop of that, YouTubers only have access to a limited pre-approve list of games. Super Smash Bros., Nintendo’s huge cash crop, is noticeably absent from this list.

This new plan could have number of chain reactions that could very well sabotage the company as well as Nintendo-specific YouTube videos.

To understand how the Nintendo Creator’s Program could backfire, we have to take a quick look at Youtube’s current gaming trends, and how they impact the gaming industry.

Super Smash Bros Wii U

Super Smash Bros., a franchise that helped bolster Nintendo’s recent earnings, can’t be monetized by YouTube videos.

‘Let’s Plays’ are a win for gamers and publishers alike

Let’s Play videos are extremely popular for many reasons, and quite honestly they are a win-win scenario for both gamers and publishers/developers.

In a viewer’s perspective, the genre is not only entertaining but informative, as gamers can see any particular game in action. As every LPer has different playstyles, watching multiple videos on the same game can answer a ton of questions as well as provide the viewer with a solid grasp of the game’s quality.

You get to see the game in action, see how the LPer reacts and interacts within the game’s world, essentially providing an entertaining preview.

In the perspective of publishers, Let’s Play videos are pretty much “free press”. If a high-profile LP’er like NorthernLion or perhaps even Total Biscuit plays your game on their channel, odds are people will be interested–even if the game is portrayed as bad.

And of course positive sentiments lead to sales. But more importantly, YouTube is a massive outlet for exposure, which is the life’s bread for any game developer or publisher. In many ways LP’ers are unsanctioned PR reps, and gamers have formed a strong bond with their judgements.

As more and more YouTubers commit to Let’s Plays, the more exposure and content is generated, fueling an aspect of the games economy that’s been present for quite some time.

Going viral

Despite it’s apparent “good” intentions, the Nintendo Creator’s Program forcibly jeopardizes the established YouTube-gaming society, and shows just how out of touch the company is with the current trends of the gaming industry.

Nintendo’s empirical reign over its own content is technically just within the margins of the law, but being “right” in this case only threatens to break gamers’ trust as well as alienate LPers.

The company trying to inherently control and profit from every single monetized video is reminiscent of the ISP and cable lobby trying to profit from Netflix traffic, and it’s caused an uproar within the gaming community.

But what’s so bad about the initiative? What’s so wrong with Nintendo wanting to make money off of content it rightly owns? When you buy a game, after all, the publisher is “leasing” you the right to play the game.

Essentially the program goes against basic tenets of the spirit of YouTube in itself, a sort of free-roaming gamer-centric public platform focused on a nexus of ever-churning content.

Anyone can make a YouTube video, and anyone can play a game. That’s the beauty of it; Let’s Plays are so accessible, and give millions of people an outlet for creativity as well as a means to share their experiences.

Thanks to YouTube’s inherently viral nature, it’s responsible for propelling games into mega-stardom. Games like Minecraft, for instance, exploded because of the ever-growing wave of user-created content. In many ways YouTube feels like the very spirit of indies.

When Nintendo put huge restrictions on what LPers could and couldn’t make money off of, it seriously hurt this spirit. Nintendo came in and clamped down an iron gate over videos.

And now they’ve lifted the gate, only a little, but they reserve the right to have it crash back down at any time.

Nintendo has made waves with its Amiibo line of figures, but will it be enough to bolster the company?

Amid questionable moves, Nintendo has seen success with its Amiibo line of figures.

Pushing LPers away

The infamous YouTube celebrity PewDiePie, who rakes in millions every year thanks to his fame, completely disagrees with Nintendo’s approach.

“This is why a tiny one man indie game like Minecraft could grow into a 2.5 billion dollar deal,” Kjellberg said. “That’s 2.5 billion… Made possible largely because of YouTube!”

PewDiePie goes on to make a superlative point that specifically outlines how Nintendo’s current plan can backfire.

Kjellberg notes that the move is like a “slap in the face” to YouTube channels specifically devoted to Nintendo games, and ultimately LPers will naturally gravitate away from focusing on Nintendo titles.

“I also think this is a slap in the face to the YouTube channels that does focus on Nintendo game exclusively.

“The people who have helped and showed passion for Nintendo’s community are the ones left in the dirt the most. And finally, when there’s just so many games out there to play. Nintendo games just went to the bottom of that list.

“Everyone loses in this scenario that Nintendo has created. That’s why I’m against it.”

This of course reduces exposure for the Japanese console-maker, and Nintendo needs all the exposure it can get.

Many LPers live off the money they make from ad revenue. It’s a serious profession to them, and they have an obligation to their fans. In many ways it’s like being a one-man TV show; host, writer, author, screener and every other job rolled up into one.

So when a publisher comes in and starts mandating full control over your proceeds, making you sign a contract just to get paid, it’s only natural to simply pull away and move on.

Jim Sterling Nintendo

But the most disappointing factor is that Nintendo has unwittingly sabotaged its own playerbase, hurting its own devoted and dedicated YouTubers in the process.

The Nintendo Creator’s Program is a step in the right direction. That has to be said. But it also has to be said that the company should never have tried to completely administer control over its own content within the free-market basis of YouTube, which resulted in the alienation in many content creators and fans alike.

Nintendo has so much to gain from the free exposure that YouTube’s LPers offer, and it’d be wise to simply embrace this model without trying to rake in a quick buck. Yes Nintendo owns the games. And yes they can legally do this. More importantly, yes, they need the money.

Even still, the company should be encouraging anyone and everyone to make YouTube videos based on their games, simply for the love of the brand itself. Sure they’ll rake in some cash, but when the cost is pushing away a good portion of popular games personalities and loyal fans, is it really worth it?

This confused plan shows that Nintendo is still detached from its own changing industry, and is yet another example of the company’s clandestine approaches, and if it’s not careful, it could very well crumble its own niche market.