Game Theory - The Ninja Mixer MISTAKE!

Episode Date: May 22, 2024

Join former Game Theory Host MatPat as he breaks down the infamous Ninja/Mixer contract that RUINED mixer!

I know this might come as a surprise to a lot of you, but as of today, I'm going to be streaming exclusively on Blender. I will now take questions from the audience. Yes, you with the face. Isn't Blender used for making 3D modeling animations and not, you know, live streaming? Blender, mixer, I don't know, they're all kitchen utensils. Heck, I'd live stream on a Neutral Bullet if they paid me an analogy. Uh, next question. Uh, you? Outdated meme guy.

Uh, yes. Uh, what, what does this do for your future theories? Still as gringy as ever. Wouldn't have it any other to weigh. Dab to you too, sir. I've got time for one more question here. Uh, you, blatant celebrity cameo. What's Jabl and Jables? How do you feel about that new Mixer Ninja deal? It was a mistake.

Hold on, hold on. Sit down. Let me explain. Hello internet, welcome to game theory. Proud to announce that we're still here on YouTube. Alright, so at this point we've all heard the news, right? Tyler Ninja Blevins has moved from being one of Twitch's largest streamers to exclusively streaming over a mixer, a streaming competitor to Twitch that's owned by Microsoft.

One that, up until this point in history, has gone largely overlooked by the gaming community. Now, why is this such a big deal? Well, there's a lot of reasons, in fact. Ninja, for the better part of the last two years, has been one of, if not the most famous gamer in the world. I mean, sure, there have been people who've surpassed him in the numbers, and yeah, objectively speaking, there are people who are better players than him. Your Fortnite champion! But in the mainstream Normie public eye who couldn't tell a Dr. Lupo from a doctor disrespect, if you ask him to name a famous gamer, it's most likely gonna be Ninja. He had the good luck of being a top player of Fortnite at the perfect time when it first started to blow off.

As that game shattered all performance numbers and started getting mainstream attention, Ninja was right there in the same breath. The poster boy for both Fortnite and its primary viewing platform Twitch. It was a perfect storm, a highly addictive e-sports ready game, a streaming service that was already making waves and getting supercharged by its parent company Amazon, and a brand-safe face to frontman the whole thing. Well, mostly brand safe. From there, PR did the rest.

As celebrities wanted to get in on the Fortnite game, they were hooked up with Ninja. When ESPN magazine wanted to feature an e-sports player on its cover, Ninja became the first. When Muppets wanted to present at the Video Game Awards, they were there with Ninja. Don't know why, but it was the thing that happened. This award is for the best game made outside of the AAA system. Did you say AAA? Yeah. Triple A.

It's amazing what they do without batteries these days. After eight years of streaming, grinding away, it was finally Ninja's time to shine, skyrocketing to 14 million followers on Twitch, becoming the most followed creator on the platform. So, to walk away from all of that. For him to be scooped up by a relatively unknown new platform, well, it's a move unlike practically anything seen in the digital landscape thus far. And so I, and I think a lot of the internet want to know, was this a good decision? Are the millions that Mixer paid to get exclusive rights to Ninja worth it?

Is it smart for a creator to just walk away from a fan base of 14 million people? Are we all aboard the mixer train now? Wooo-Wood! Honestly, I wouldn't be covering this if the answer only mattered to like one mega streamer. No, what this all really boils down to is the relationship between a platform and its users. How places like YouTube, Twitch, and yes, even Mixer, foster communities of viewers and creators. And I think that there were mistakes made in this whole Mixer Ninja deal. So pay attention, Mixer! Here's a load of free advice.

Heck, you don't even need to pay me for it. In answering the question, was this a good decision, we have to ask, was this a good decision for whom? For who? For who? Who? Who? Let's start with the obvious one first. Ninja. Was this a good idea for Ninja? Yeah.

Absolutely. It was a great decision on his part. And that's without me even knowing or even speculating what Mixer paid him. Can I make you guess based in my experience? The deals that we ourselves have seen, brand context, and relative valuation of you counts? Absolutely I can. But here's the thing, none of it matters. There's something more than dollar figures at play here.

The thing Ninja gains out of this is stability. Stability is a luxury that no online creator has. When you start a channel on YouTube or Twitch or wherever, you need to remember that you're building your house on someone else's land. And that, at any point, they could just repossess that land. Shifting algorithms, brand safety regulations, you name it, that is them reclaiming the land that your house is built on. And that's all before you even get into the fluctuations of ad rates over the course of a year.

You know how every November and December people pump out a bunch more of their best videos and then in January they basically take the month off it's all because of ad rates ad rates plummet in January and are at their highest in November and December the value you get out of a single view depends on everything the time of year what vertical you work on the title of the fricking video that is how unstable everything is here but Twitch is even more volatile because your primary revenue isn't dependent on brands who just are spending bunches of money on YouTube as a platform instead it's dependent

on fans couple thousand fans paying you, and specifically you, and fans can be finicky. In the past, Ninja has gone on record saying that taking two days off of his streaming schedule cost him 40,000 paying subscribers, which, at minimum, means him losing $100,000 of monthly revenue just like that. If that doesn't feel like instability, I don't know what is. So, in order to maintain a level of success he had on Twitch, he was practically chained to his desk and playing the same game over and over and over and over. over again for 12 hours a day. But even then, there's no guarantees. It's no secret that ninja's Twitch stats were going down.

According to statistics from TwitchTracker.com, April of 2018 was his peak, with his streams netting on average 125,000 concurrent viewers. Fast forward exactly one year to April of 2019, and that number was a fourth of that, with each stream only netting him 36,000 viewers on average. But again, on Twitch, your paycheck ultimately hinges on Dempade subscriptions, and as you can imagine, them subscriptions were also falling away. Again, using data pulled by Twitch tracker, we see that March of 2018 was his peak. 285,000 paying subscribers on his channel. That is a huge number for just one guy. I mean, for comparison, the WWE, you know, the company that pretty much owns the sport of wrestling, Hulk Hogan style, I'm gonna throw you in a trash can, brother! They have 1.2 million subscribers to their service, so for Ninja to be pulling a fourth of that's pretty darn impressive. But then, a Again, fast forward one year to March of 2019, and you've got yourself a number that is down to a mere 20,000.

From 285,000, a year later, to 20. I mean, it's still great, don't get me wrong, 20,000 people paying to watch your stuff. That's amazing, but it's less than a tenth of what it was just 12 months prior. That is a huge blow to your monthly income. Add to that, the declining popularity and relevance of Fortnite, as well as Ninja's challenge of getting his audience to care about any other game other than Fortnite that he happened to be playing, and the writing is on the wall. But then Mixer comes around with a guaranteed paycheck for some undisclosed seven- or eight-figure amount,

presumably over the course of a few years, and you've got yourself stability. Stability that truly can allow Ninja to... Get back and touch with my roots? I mean, this deal should set him up to retire or work for fun for the rest of his life if he's smart, and wasn't already set from that unbelievably great 2018 that he had. Heck, if he or his team are smart and good at negotiating, they probably should have also had a deal that gives them a percent of the earnings from all other creators who come onto Mixer during the month following his switch because they came over to Mixer probably because of him.

Over on the consulting side of what we do, we've been talking to a lot of successful creators lately on exit strategies. How to successfully get off the treadmill of content that is digital video, YouTube, Twitch, or otherwise, and well, in Ninja's case, the numbers were sagging and he sold high. Exactly what he should have done. So Ninja's decision? I mean, maybe I would have suggested thanking the fans a bit. more than he did, but still, definitely the right choice. For Mixer, though, the situation is a lot more nuanced.

I mean, after all, they're a part of Microsoft, a multinational corporation. They're not just a single streamer who can retire after a couple years. So the interests there are gonna be a lot more complicated. As far as Mixer is concerned, their goals are the same as any video platform. Build a community of users, both viewers and creators, and then find a way to monetize that community via a combination of advertisers and fan donations. Now, whether Mixer is getting those things is something I'm about to talk about a little, little bit later, but there is one thing we know right off the bat from this move.

Mixer exists. One of Mixer's biggest hurdles since launching back in 2016 has been making their presence known in a way that gamers and the rest of the world care about. As someone who's been attending E3 since 2013, the biggest gaming expo in the country, I've certainly seen that Mixer's been there for the last three years with a prominent and not altogether exciting booth. I always pass by it in the hallway and I'm like, there's Mix. Oh my gosh, Nintendo has a rock wall this year? And that's pretty much it. Meanwhile, on the same Expo floor as E3, Twitch has a massive purple behemoth of a booth in the middle of the action where they're featuring clips from their biggest streamers Like Ninja.

But now that story has suddenly flipped on its head. Looking for Google Trends results for Mixer over the last 30 days? It's clear that Ninja's decision to jump platforms caused a major spike in searchability and almost doubled the ongoing search traffic for Mixer moving forward. You remember my Google Stadia video where I talked about YouTube killing violent video games and I spoke a lot about the power of earned media? while everyone covering Ninja's move here? That is all earned media for Mixer. So at least for now, twice the number of people are looking for Mixer than they were free Ninja. Pretty good boost.

Using some comparison search traffic between Mixer and Twitch, it's also clear that this was a smart move for Mixer to poach someone who's primarily on Twitch, rather than on YouTube. Compare Twitch to Mixer, and you can see that in terms of publicity and search traffic, Mixer has been within striking distance of Twitch for quite a long time. Compare the two of those to YouTube though, and it's clear that Mixer doesn't even have a chance to peaseer peak above Google's juggernaut. Even when YouTube isn't considered a great platform for live streaming. By grabbing up Ninja from Twitch though, Mixer actually spiked above Twitch and searched for the first time ever. Thereby forcing people who thought of Twitch as the only viable streaming site to get to No Mixer, too.

And while search results just look like lines on a graph, they translate to an industry of shifting priorities out in the real world. I mean, most people don't see a lot of the behind-the-scenes stuff that happens around YouTube talent, But at this point, there are full teams of managers, agents, and marketers who are all trying to get their creators into the next big thing. So when Ninja made the jump to Mixer, managers and agents heading up gaming creators, as well as the creators themselves, all started saying, you know, I probably should have a contact at Mixer. I should make sure I know what's going on over there. While what we hear is anecdotal and comes through the consulting that we do, we do know that those conversations are starting now. And those conversations happening is just huge for a platform that didn't exist in the public's eye just like a couple months ago.

All of a sudden, you are at the table. You are in contention. You have a shot. You have a ton of important people in the gaming and digital video industry reaching out to your platform because you, Mixer, might just be the next big thing. While anecdotes are buzzy, though, what really tickles my theory bone is hard data. Sites like Twitch Tracker have won some fascinating comparisons about Ninja's first couple of weeks on Mixer that have shown not just how he's doing, but how the platform is benefiting from him being there. Over the past couple weeks, Ninja's streams on Mixer have accounted for 32.1%

of all viewership on Mixer, which means that he is single-handedly holding up a third of that platform. Remember that number, because I'm gonna go back to it in a minute, but for now, suffice it to say that that is a huge percentage of views. What's more, Twitch tracker reports after Ninja's initial streams, about 6% of his audience, accounting for a little less than 2% of the total site's traffic, stuck around to watch a few other streamers. Meaning that the rest of the platform has indeed gotten a little bit of extra viewership spillover from Ninja. I mean, 6% may not seem like all that much. It actually comes out to be about 130,000 people total. Not breaking the bank or anything, but that number could be huge if those people do indeed come back on a regular basis

and expose themselves to more mixer creators. And if that 130,000 people talk to their friends about how much they like what they see, that percentage can compound with time. Clearly then, mixers received a huge boost in PR, a direct viewership increase from Ninja, and an incremental gain from viewers sticking around on the platform, So Ninja cashes out and Mixer is suddenly in the mix, so to speak, thereby making it a win all around, right? No, absolutely not.

I firmly believe that Mixer has made the wrong move here, that the tens of millions that they put into Ninja were ultimately flushed down the drain, put through the shredder, like just a really dumb, dumb, silly, short-sighted move. But to truly understand why, we need to go into the economics of digital platforms and look at the fundamentals of what makes an online community work. So let's take a quick look at the numbers, shall we? Ninja, in his first 18 days on mixer, got himself 10 million views. Now, on YouTube, you can buy cheap views using YouTube's ad systems for about two or three cents of view. And that's not any sort of ClickFarm's sketchy black hat views.

These are views that are outright purchased via YouTube's own advertising systems. So that's about $300,000 worth of viewership for the first half month of this partnership so far. Not too shabby. But since that first big push, things have started to level off with him getting 20,000 average concurrent viewers per stream now. That translates to about 300,000 views per stream. Doing some quick back-in-the-napkin math here, that's 300,000 times roughly 260 streams per year, or 78 million views times three cents, about 2.3 million dollars worth of views in any given year. Definitely good, but it's still far below what I assume and what I've heard through my content. that he's actually getting paid. And still, that's not the whole story. When it comes to gaming itself, our views are actually much less valuable

than the views of, say, a channel that appeals to moms who are making most of the household's purchases. Optimistically speaking, a view in gaming is like 3 tenths of a cent. .003, my friends. So if you're looking for the actual value of 10 million views, you're talking something more like $30,000. That is a really low number that rounds out

the year for Mixer with $234,000 worth of value. If you're paying someone eight figures to get your views, well, that's still two figures short. But remember what I said last time. Most livestream platforms like Twitch and Mixer are earning most of their money off of you, your donations, taking a cut out of every subscription, ember, bit, bite, super chat, and sparkle that you give to your favorite streamer. So, let's look at what those numbers could look like for Mixer here. A subscription on Mixer is $6. Now, normally Mixer would take a split of that. But considering they just paid a solid eight figures for Ninja's exclusivity,

chances are they're taking his whole cut, at least for a while, as a means of making up that lost revenue. Subtracting out Amazon Prime subs, at the height of paid subscribers during his time on Twitch, Ninja had about 50,000. This was about the time that he had 4 million total followers. Now, that's him at his absolute height of power. When he left Twitch, he was at 20,000,

but we're gonna assume best case scenario here. Matching that 50,000 number on Mixer, a relatively unknown platform, with half the number of new followers is nigh on impossible. However, Mixer is doing a free giveaway month to incentivize people to subscribe, and then hopefully forget about the fact that they've given them their credit card information and are on auto pay. So, let's just say that it gets all those 50,000 people on over. That would be $300,000 per month going to Mixer. That is best, best, best case scenario. It's a great number to be sure, especially off of one. guy and it results in $3.6 million total for the year headed Mixer's way, which is phenomenal

unless of course you're paying tens of millions of dollars a year to keep that guy on your platform, which Mixer seems to be. What would normally be a huge payday is just your really expensive employee holding down a third of your platform. In short, any way you slice it, the numbers just don't add up in Mixer's favor. No, the Ninja deal wasn't just about pure revenue. It was a long-term play. They're not thinking about one year, they're thinking about the next six. And that is what we haven't covered yet. Going back to when I started talking about Mixer, a video platform has two goals. One, build a creator and viewer community, and two, monetize it through advertisers and fan contributions.

When it comes to attracting advertisers, there's a case to be made that a lot of the companies who weren't thinking about advertising on Mixer suddenly are thinking about it now. With the controversies that Twitch has been seeing recently in their plateauing viewership numbers, Advertisers in the gaming world could be persuaded to hop ship to a different streaming platform with a brand friendly ninja as their poster child and one with added stability of Microsoft But it's hard to advertise on a platform when there's only one person on it That's where the community piece comes in and where the mixer ninja partnership Really starts to fall apart to understand why community is important think about each platform as a country and their community as their population Instagram is Finland where everyone is somehow leggy and blonde.

Facebook is the country where everyone's over 40 and miserable. Maybe Russia? And Twitch is the country that if you're rich enough, you can probably toss around your cat. Too soon? Eh, maybe too soon. The thing about any country is that in order to make it work, you need lots of people to fill lots of different roles. And it turns out that video platforms work in much the same way.

There are gonna be small upstart creators on every platform. There are gonna be a couple really big standout names at the top. But what really holds a platform up in the long run is it's middle class. Consider former President Obama's case for the US needing a strong middle class from 2011, summed up in a blog post written by David Madeline. Quote, The middle class has a strong interest in making government work well, because quite simply, the middle class depend more on public services than the rich." If you're not getting how this applies to the Ninja Mixer situation, basically what he's saying

is that if you're in the middle class, you need the system you're working in, or in case the video platform you're on, to work for you. The things that the middle class tend to push for benefit the most people because they're representing the average user of the platform. Good public transportation and affordable healthcare are two great examples. If you're rich, those things don't matter as much to you because you got yourself a car, a driver and enough money to pay for the best hospitals. But for the middle class, those things matter because getting saddled with a $20,000 hospital bill means a huge chunk of your yearly income disappearing until that bill gets paid back.

Now look at YouTube. Recently, YouTube made a huge policy change to prevent unfair copyright claims against creators. After years of pushing, YouTube came out with new features that make it harder to make false copyright claims. They even started suing some of the worst copyright trolls to make an example of what happens to people who abuse their systems. And who were the ones making the biggest push to get something like that nacked? Mid-tier creators, those with tens, or even hundreds of thousands of subscribers. Not so much from those with subscriberships in the millions, because big channels could sometimes backdoor their way out of those sorts of copyright situations,

using their agents or their YouTube contacts. Or heck, those creators may not have even known those claims existed in the first place because they have teams dedicated to handling that sort of stuff. Mid-tier creators, though, don't have that luxury. Every false copyright claim is a punch to the gut. It is money directly out of their pocket. It is money that is, quite frankly, probably going to their rent check at the end of that month. So they made their voices heard in huge numbers over the course of months,

until the system started changing. And just to make it perfectly clear, there were indeed big creators fighting for this as well. I'm not saying every channel with over a million subscribers was like, ah, I don't care about the copyright system. A lot of us do, and a lot of us have been fighting for this tool for years, ourselves included. But many large channels had other options in these sorts of circumstances, or didn't feel it as acutely as the middle class.

Obama also advocated for an economy that grows, not from the top down, but from the middle out. The blog post notes that the highest classes, quote, can easily opt out of a country's regulations, or even move to another country. Whereas when the middle class is strong, they have the political power to achieve their goals. End quote. Think again on how this applies to us. Top-tier creators on any platform often don't have the rules apply to them. Just look at the situation Twitch is dealing with right now over favoritism.

And if they're not getting the treatment they want from that platform, they just move to another country, like the United Mixer Emirates. But the middle class has to make the system work for everyone, because they don't have the luxuries of moving and bringing all their stuff, or fans with them. It's also pretty well known that in economics, the middle class is what drives innovation. Entrepreneurs disproportionately come out of the middle class,

and the inventions that solve everyday problems comes from people who are dealing with those everyday problems, not the rich elite. I'm not saying that Obama's way is the right or the only way. The point of this way over-extended analogy is that moving platforms forward in the long run requires creator communities. not just a couple of elite individuals sitting at the top.

Nothing really replaces a creator middle class. And it also doesn't save the platform in the event that something changes, like, say, a game losing popularity. Let's talk about a hypothetical scenario where Fortnite disappears tomorrow. What would happen to all the platforms where people play it? Well, YouTube would stop getting Fortnite videos and basically go on as normal, since it's all about them diamonds these days, fam. There's just so much other stuff on YouTube that the viewership they would lose would be negligible.

YouTube's creator middle class has tons of interests from acrylic pouring to listicles about awkward save systems and games Losing Fortnite doesn't really matter a whole lot. There's plenty of other stuff to watch By the way, Rabid Luigi, I watch your channel every week, literally every week. Just saying, you got a fan over here Congrats on your big move. Moving over to Twitch, if they lose Fortnite almost 10% of the entire platform disappears according to viewership statistics of games played on Twitch. Twitch has a much smaller creator community with narrower interest in a less built-out middle class. And you can probably see where this is going. The situation on Mixer is the most dire, where Ninja accounted for 50% of the total platform viewership in his first stream. And like I mentioned earlier, accounts for 32% since then. If Fortnite disappears, Ninja would still be there,

but the other games he's played typically haven't pulled the same audience for him. Based on his Twitch stats, he loses 31% of his audience when he plays Apex Legends, 78% when he plays League of Legends, and over Over 90% of his audience when playing PubG, Halo, or Final Fantasy. Since so much of Mixer's viewership is based on Ninja, and so much of Ninja's success is based on Fortnite, that investment in Ninja starts to look a little unstable in the long run. The long-term problem with Mixers buying up Ninja and only Ninja is that he's one creator basically playing one game at the very tippy top of the creator economy. Great PR play in the short run, but in the long term, top creators don't decide whether a platform lives or dies. The platform spent its cash on one megastar, effectively making the rich richer and ignoring the fact that you can't create

Platform culture with just a single person. Presumably the hope is that with Ninja's move Lots of mid-sized creators will be inspired to make their jumped mixer. But unlike Ninja, there's no revenue guarantee for them. No promise of financial or creative freedom like he has. For the millions that mixer probably paid for Ninja, they could have made the less splashy PR move, but probably much more impactful move by giving that money to mid-sized creators. They could have encouraged hundreds or even thousands of mid-sized creators to build out a more diverse and frankly more loyal set of streamers on their land, giving the audience more options and hoping that some of them would indeed become hugely successful in their own right. Instead of having one creator whose income now doesn't rely on the quality of his streams,

they could have instead backed thousands of streamers who would still be hungry for their opportunity, who hadn't gotten their big chance out in the spotlight, and who had said, still be looking to build audiences in their own right. They'd be vying for that number one mixer position rather than just someone who's plopped into it and is basically unbeatable from this point forward. Ninja was a risky investment, not a diversified one, and not one that directly contributes to the platform growing in the long term. What mixer showed was that they care about a headline, not a community, which to me doesn't bode well for the future of streamers there. But hey, who's the same? Maybe I'm wrong. Maybe their bet'll pay off and there'll be a steady stream of players headed over there to make their fortunes on mixer inspired by ninjas intrepid, if not exactly risky, jump on over.

Maybe we're around the corner from the mixer revolution. Maybe. Tell that to Google Stadia. In the meantime, remember, it's all just a theory. A gaming platform theory. Thanks for watching.