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YouTube channels are selling for millions

YouTube channels are selling for millions


And more are expected this year

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A top 100 YouTube channel has sold for millions of dollars for the second time in a matter of months, and it’s the start of what YouTubers and behind-the-camera management believe is a coming wave of mergers and acquisitions. The trend is led by individual creators who worry that YouTube won’t deal with them unless they are (or look like) a formal corporation., one of the biggest YouTube channels in the Spanish-speaking world, announced last week that it had been sold in December. The sketch comedy channel has 19 million subscribers — more than Logan Paul and bigger than the YouTube presence of BuzzFeed. Its sale follows the acquisition of YouTube’s 13th most-viewed channel, Little Baby Bum, in July. And they may be just the beginning.

The trend is being driven by three major shifts: YouTube shunning homegrown creators in favor of Hollywood stars, creators’ ongoing struggle with burnout, and the lucrative off-platform opportunities.

“You’re at the whim of the ever-changing algorithm or a random support email address.”

Concerned with controversial creators pushing advertisers away, YouTube announced a slate of new original programming last May that starred Will Smith, Kevin Hart, and UK comedian Jack Whitehall instead of its homegrown talent. At the same time, plenty of creators have taken breaks from the site in the last year due to burnout from the intense workload, including comedy vlogger Elle Mills and Rubén “El Rubius” Gundersen, one of the world’s biggest gaming YouTubers. And creators can see the success of those who have achieved sustainability through podcasts, traditional media hosting duties, and book deals.

As a result, YouTubers are trying to look more like the mainstream celebrities they once pitted themselves against so they don’t get left behind. That often involves increasing the level of oversight and professionalizing operations, both of which are easier by pooling together or selling out to formal management, like a multi-channel network (MCN).

The increased professionalism is “a line of defense” against changes occurring on the platform, says Jason Carpentier, who helps run his wife Rachel’s art and DIY YouTube channel, Chezlin, which has over 100,000 subscribers. “[As a smaller creator], you’re really in a place where you’re at the whim of the ever-changing algorithm or a random support email address,” he says.

Whether their fear of abandonment is founded or not — after all, YouTube still relies heavily on its homegrown talent — doesn’t matter. The worry alone is making people take action. “If you’re a channel that wants to grow now, you should consider a strategic partnership of some kind,” says Derek Holder, who ran Little Baby Bum with his wife until the sale but has since stepped away entirely from YouTube as a result of the acquisition terms.

Bigger opportunities like product licensing are easier when creators are part of a team

The buyers of Holder’s channel were former executives of DHX Media, which owns the Teletubbies brand, and Maker Studios, a YouTube MCN owned by Disney. The executives set up a new company, Moonbug, to buy the channel, which has since raised $145 million in funding for further acquisitions.

Now, a majority stake in Touché Films, the production company behind Enchufe, has been bought by 2btube, one of YouTube’s biggest MCNs.

While the exact terms of the deal have not been publicly released, according to a source with direct knowledge of the matter, the purchase values Touché Films at more than $5 million. The sale closed just six months after Little Baby Bum changed hands for what Harry Hugo of the Goat Agency, an influencer marketing firm, estimated was between $7.75 million to $11 million. (Holder declined to comment on the actual figure both when the news broke and when interviewed for this story.)

These acquisitions suggest there are more to come, says Ian Shepherd, chairman of the London-based Business of Influencers, an industry body. “I would expect to see more channel sales like this in the coming months,” Shepherd says. Buyers who are able to juggle the jobs required to run big channels are attracted by the guaranteed ad revenue from their huge, highly engaged audiences.

Some creators also see an opportunity to lighten the workload by inviting bids from bigger businesses. Everyone from PewDiePie to Lilly Singh, who, for years, has styled herself as “||Superwoman||,” say they’re struggling to continue juggling being on-camera talent, producers, directors, marketers, and salespeople. YouTubers are grateful to get help handling the challenge, Holder says. “For a creator, the ability to share the workload with a bigger team of specialists is really appealing.”

By more closely embracing TV and movies, YouTube starts to look more like the media it’s trying to replace

Creators are also making the calculation that bigger opportunities, like product licensing, merchandise, and intellectual property rights, are easier to gain under group management, rather than as sole traders.

The ability to do more with their channel as part of a larger team is one of the reasons Derek and Cannis Holder cited for selling Little Baby Bum. “We’d come to a crossroads to take the company to the next level,” Derek Holder said when he sold the channel in September. Little Baby Bum was starting to branch out from YouTube to traditional TV. “In order to do that, we needed to pull together a team.”

There’s still a big divide between the cultural reach of a Hollywood star and a YouTube star. That’s why some of YouTube’s biggest independent creators, who boast hundreds of millions of views, still can’t land a television series away from YouTube. And among those who might be able to sell or join an MCN, there’s division on whether it’s worth it. In recent years, YouTubers have pointed to MCNs as feeling outdated, since they can earn ad money on their own. The collapse of networks like Defy Media and Machinima have also left some creators distrustful.

Carpentier and his wife haven’t yet taken the plunge — “We’re still weighing up options,” he says — but doing a deal could extend their reach on and beyond YouTube, shoring up future safety. Enchufe’s sketches are already broadcast on Comedy Central across Latin America and on Galavision in the US, and a movie, distributed by Sony Pictures and co-produced with the team behind Netflix hit Narcos, will hit theaters this year. Bastian Manintveld, the executive chairman of 2btube, told The Verge that owning Enchufe would help his other YouTube talent dabble in “higher-end productions” like movies and TV shows.

“Traditional media need to reach this audience, so I see us doing a lot more with them in the future as we grow in higher-end production capacity,” Manintveld says.

The risk is that by more closely embracing TV and movies, YouTube starts to look more like the media it’s trying to replace — both in front of the camera and behind the scenes. Once accessible and relatable stars may start to seem more distant from the viewers who brought them success.