The Try Guys See Fast Success with Their Subscription Service

Zach Kornfeld, co-founder of the Try Guys, shared insights into the challenges of relying on advertising revenue during an interview with CNBC. He described the inherent instability and unpredictability of ad-based business models, emphasizing that they are subject to numerous factors beyond a creator's control. Kornfeld characterized the situation as "tenuous at best" and "corrosive and explosive at worst," indicating that such reliance often forces creators to optimize their content for metrics that may not align with the best interests of their audience.

The advertising landscape is particularly precarious at the moment, with threats such as a potential TikTok ban that could impact approximately $15 billion in annual revenue for small and medium-sized businesses. Additionally, the growth of ad revenue on platforms like YouTube is slowing. In light of these challenges, creators are increasingly seeking alternative revenue streams to ensure more consistent and reliable income.

In response to the volatile advertising market, the Try Guys have launched their own subscription-based streaming service called 2nd Try. This platform allows subscribers to access exclusive content for around $5 a month, free from advertisements. Since its launch in May, the Try Guys report that 2nd Try is on track to achieve profitability within a few months, reflecting a successful pivot towards a more stable revenue model.

Other content creators are also exploring subscription-based models as a way to mitigate the instability associated with social media algorithms. For example, channels like Watcher Entertainment and Dropout have introduced their own streaming services to maintain greater control over their content and revenue, avoiding the unpredictability of social media platforms.

Social media platforms use complex algorithms to curate users' content feeds based on their past interactions and preferences. These algorithms prioritize posts that are likely to generate high engagement, such as likes and shares. This often pressures creators to produce content tailored to these algorithms, which can sometimes compromise content quality. As a result, many creators are looking for alternatives that offer more direct and stable income sources.

Patreon is one such alternative, allowing creators to connect directly with their most loyal fans through a subscription model. This approach helps creators bypass the need to please social media algorithms and ensures a more reliable income stream. Jack Conte, founder and CEO of Patreon, highlighted that traditional advertising revenue is often unreliable for creative professionals, leading many to seek out more stable revenue options.

The Try Guys initially gained prominence through BuzzFeed before launching their independent venture in 2018. However, their trajectory faced a significant setback in 2022 due to a scandal involving one of their co-founders, which negatively affected their financial situation and brand relationships. This scandal led to a period of financial strain, with the company operating at a loss for nearly two years as production costs outpaced revenue from YouTube.

Despite these setbacks, revenue from 2nd Try now accounts for about 20% of the Try Guys' total sales. While they will continue to post content on YouTube and benefit from its advertising revenue, Kornfeld and co-founder Keith Habersberger are placing a significant focus on growing 2nd Try to become a major income stream. This strategy, combined with revenue from merchandise sales and live tours, represents a diversified approach to stabilizing and expanding their financial base.