Media experts split on the viability of Musk’s proposed YouTube rival

But social media and advertising experts are divided on whether the strategy will help X recoup the revenue it's lost from declining ad spend.

Musk, the Tesla CEO who bought the social media platform in a dramatic $44bn acquisition in late 2022, said last October that he planned to compete more readily with both YouTube and LinkedIn. X announced in January that it would be a “video-first platform.”

The plan to debut a video streaming TV app is also part of X’s ongoing efforts to diversify the platform’s revenue streams. After driving out many of the app’s largest advertisers – including Disney, Warner Bros. Discovery, Apple, IMB and Paramount – over controversial platform changes and lax content moderation practices that have threatened brand safety, X saw its revenue decimated. In fact, the platform was set to lose up to $75m in advertising revenue by the end of 2023, per a New York Times Report.

The problem was exacerbated by a botched effort to overhaul the platform’s user verification program and to debut new subscription-based features that initially saw low rates of adoption. Today, premium products on the app are performing somewhat better; the company is now making nearly one-quarter of its revenue via premium subscriptions and data licensing, according to On The Money.

The decision to introduce a video streaming service also represents a small but meaningful step forward in the billionaire’s stated goal of creating a so-called ‘everything app’ à la China’s WeChat, which he envisions including not only social features, but also integrated services like payments processing, messaging and more.

In another advancement toward this objective, X last week enabled video and audio calling for the app’s nearly 550 million users. This followed X’s rollout of Grok, an AI chatbot designed to rival OpenAI’s uber-popular ChatGPT.

The potential for winning eyeballs and ad dollars

Some social media experts are bullish on X’s foray into video streaming.

“This new direction from X is truly exciting,” says Mike Allton, a social media marketing expert and head of strategic partnerships at social media management platform Agorapulse.

Allton says that while X may not initially be able to take YouTube head-on, a strategic focus on long-form video is likely to entice both user engagement and advertising dollars.

It’s an idea echoed by other experts, including Matt Navarra, a leading social media consultant and industry analyst. “Strategically, it makes sense,” he says. “There's a big push by all the platforms to have a bigger presence in your living room and on the TV, for lots of reasons. It’s partly because people are watching [more] long-form content on Netflix, Disney+ [and other] streaming channels. And longer-form content tends to work well on the bigger screen rather than a mobile device.”

Like Allton, Navarra says that longer-form content creates “greater opportunities for advertising.” Even for brands wary of X’s content moderation and brand safety issues, the opportunity to place ads around high-quality content on a household’s main screen is likely to prove enticing, Navarra suggests.

Ads, of course, aren’t the only possible monetization move in X’s playbook. The new video streaming app could very well prioritize subscriptions, or offer a range of tiers – like YouTube, Netflix and others – that give users the choice between paid, premium subscriptions and cheaper or free ad-supported offerings.

The MrBeast effect

Of course, cashing in on either or both of the advertising or subscription revenue opportunities at hand isn’t a given. For X, Navarra says, it will require rights to in-demand content, or, ideally, exclusive content partnerships, in addition to or in lieu of a lineup of creators to regularly generate new content.

X has already shown signs of investing in creator programs. Early last year, the platform launched a revenue-sharing program for creators subscribed to X Premium (at the time called Twitter Blue).

More recently, it’s been clear that the X team has tapped specific creators to promote X’s video-sharing features. Most notable among them is MrBeast, the 25-year-old YouTuber known for documenting over-the-top philanthropic efforts and giveaways for his 240 million subscribers. Even users who don’t follow the creator on X have noticed MrBeast content appearing more frequently in their X feeds of late.

Following invitations from Musk to try out X’s video-sharing tools, the creator took to X in January with the goal of assessing how much ad revenue he could generate with a video posted to X (presumably in comparison with the revenue he makes on YouTube). A week after posting his video, MrBeast disclosed that it drew in 150m views and generated about $260,000. The number, according to The Verge, comes in above the $167,000 that MrBeast made for a recent YouTube video over a five-day period – a positive sign for X.

“Investing in specific creators like MrBeast is a brilliant move to encourage more creators and businesses to post videos,” says Agorapulse’ Allton. And this encouragement alone has the power to generate more revenue for X, considering that, as it stands, users must have a premium subscription to post videos of any length. “This move will result in more creators willing to spend a few bucks a month for the exclusive privilege of being able to leverage the platform that way, resulting in more recurring revenue from X’s user base,” Allton says.

As more creators leverage the platform’s existing video-sharing tools, X could witness a kind of network effect. “If more creators and businesses are posting longer videos, that will result in longer app usage and will power the new smart TV app, resulting in far more ad inventory for businesses,” Allton says.

Allton is confident that this strategy will pay off for the social platform. “I predict this will have a huge impact on X’s revenue and growth over the next 12 to 18 months,” he says.

Caution: roadblocks ahead

Not everyone is as confident in the strategy’s surefire success.

Navarra points out that not only do X’s creator partnerships pale in comparison with the likes of YouTube and TokTok, but growing these relationships also won’t make up for the fact that X fundamentally lacks some of the infrastructure that makes YouTube and TikTok so successful.

“X doesn’t have a great creative monetization program compared to … YouTube, TikTok or Instagram Reels, although it has improved in recent months and there is an ad share potential there,” he says.

And even if X were able to build out its creator partnerships and revenue sharing program effectively, no one is under the impression that advertisers’ concerns about content quality and brand safety will disappear overnight. “Advertisers [will still worry about Musk’s] behavior, the toxicity, the lack of [content] moderation and the somewhat concerning policy decisions that he makes with the platform … all of [these factors] are off-putting to big brands,” Navarra says.

It’s an idea shared by other industry leaders. “Brand safety will remain paramount for advertisers, so X will need to balance providing consumers a unique content experience with offering advertisers’ assurances around brand safety,” says Jeremy Haft, chief revenue officer at performance marketing firm Digital Remedy.

And at a more fundamental level, users, creators and advertisers already have an abundance of options when it comes to consuming video content, and the incumbents have garnered impressive levels of loyalty.

Musk’s stated goal of taking on YouTube on TV screens will prove particularly challenging, considering that 45% of total YouTubes viewership comes via TV, with most TV viewing sessions lasting 20 minutes or longer, according to 2023 research from eMarketer.

“Unless he has some really good content partnerships coming up and the platform is less problematic [in terms of] content – and it offers better creative monetization deals along with a more robust, reliable, bug-free platform … then I struggle to see how it will take off,” says Navarra.

“There are a lot of big ‘if’s and ‘but’s in terms of all of the things that Elon Musk needs to line up and make work for it to become a viable proposition. And that’s without considering the competition he’s facing from established platforms that are very dominant, including YouTube and TikTok, who have all of that sort of content and creative monetization setups – and don't have these toxicity issues. It’s a big mountain to climb, and it’s difficult to see any immediate scalable levels of success in the short- to medium-term.”

Ann Handley, a writer, speaker and chief content officer at marketing education firm MarketingProfs, takes a simpler view: “Musk fans are high-fiving. Everyone else is throwing up a shrug emoji as a sign of exhausted apathy.”

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