When Amazon Video Direct (AVD) was announced last week, lots of industry observers saw it as a new YouTube competitor. At some point that may be true, but for now, there is little for YouTube, the undisputed 800-pound gorilla of the online video industry, to be worried about.

While video content providers will welcome another deep-pocketed third-party distributor into the market, the most important challenge AVD faces is proving that it can make incremental money for these providers, beyond what they can already earn on YouTube, their own direct channels/apps and elsewhere.

Amazon revealed 4 different ways that content providers can monetize their videos, but each has challenges.

One model is to be paid a royalty fee of 15 cents per hour streamed in the U.S. and 6 cents per hour internationally. Sure, Amazon has tens of millions of Prime members, but unless Amazon aggressively promotes AVD videos, it’s going to be awfully hard to find them so the views will be low along with the royalties. With Amazon paying billions to license and create premium content, the odds are against Amazon using its best real estate to promote AVD content.

Another model for AVD content is to be positioned as an add-on subscription as part of the Amazon Streaming Partners Program (SPP). I’m bullish on the SPP, but for it to have a shot at working for AVD providers they have to have a pay model, as all current SPP participants do. Many of the AVD partners announced (e.g. Conde Nast, Mashable, StyleHaul, Business Insider, etc.) are solely ad-supported to my knowledge. Clearly, nobody should expect to be paid for video that’s freely available elsewhere. Even for those that aren’t currently ad-supported elsewhere, unless they have a well-known brand and offer a deep, compelling catalog, gaining subscriptions on Amazon will be very hard.

A third model is digital rental or purchase. The same points above apply to this - nobody’s going to pay for video that’s freely available elsewhere. Rentals and purchases are a tough model to begin with, where only the most desired content (e.g. kids’ TV shows and movies) really succeeds. In addition, the bar for digital rentals and purchases has also been getting higher as SVOD services’ quality has improved.

Finally, there’s free, ad-supported distribution to all Amazon customers. This is potentially the most interesting of all, yet it has serious drawbacks too. Since most (all?) of AVD videos will be available elsewhere, audiences will be fragmented and Amazon will be competing with YouTube’s superbly SEO-optimized discovery and other outlets. Consider, how many people will wind up watching StyleHaul’s “Vanity” on Amazon, when it’s available on the company’s own site, promoted through its own social channels and on YouTube? Importantly, are Amazon views going to be truly incremental or just shift eyeballs from elsewhere?

No doubt mindful of these issues, Amazon also announced an “AVD Stars” program, which is a fund of $1 million per month to be divvied up among the top 100 AVD titles in Prime Video. Amazon didn’t offer any additional details. A straight average would mean an incremental $10,000 per month for each of the top 100, though Amazon is almost certain to somehow weight the payouts. As a result, consistent AVD Stars beneficiaries could do quite well, while for those at the bottom of the list the payouts could be quite small.

While Amazon does have a huge global customer base, AVD video will only available in the U.S., U.K., Germany, Austria and Japan where Amazon Video is available. Conversely, YouTube is available virtually everywhere, and it has said repeatedly that 80% of its billion plus monthly viewers are outside the U.S. At YouTube’s Brandcast NewFront 2 weeks ago, NBA commissioner Adam Silver said that the Philippines is second only to the U.S. in views for its clips, proving viewership can be unpredictably distributed. YouTube is localized in 88 countries and is available in 76 different languages (which it says covers 95% of the Internet population). Amazon hasn’t shared any details about localization at all.

Amazon’s comparatively smaller reach is a huge drawback in a scale business model like advertising. AVD providers need a ton of views to make any real money from ads. And it’s not just tonnage that matters, but also the sophistication of the underlying ad system and infrastructure that counts. This is where YouTube has a big advantage, leveraging Google’s own investments and offering TrueView, the most viewer-friendly video ad unit on the market. All of that means the effective revenue per view is likely to be lower on Amazon than on YouTube, making any meaningful share-shift in viewing from YouTube to Amazon a net negative for AVD providers.

If the monetization issues weren’t significant enough, there are at least 2 other key considerations. One is that Amazon’s brand is not fully aligned for AVD. Ask anyone and they’ll tell you, YouTube’s brand stands for “video.” Ask about Amazon, and you’ll still likely hear “commerce” most often.  To be sure, Amazon has made tremendous strides in video in a very short time and awareness is strong for some of its shows (at least anecdotally). But Amazon has a long, long way to go before it could be genuinely perceived as a “go-to” place for all things free video. YouTube has become the second most popular search engine (after Google itself), making it THE video destination.

The other issue is that early reviews of AVD have highlighted additional operational complexity and higher costs for AVD vs. YouTube. These include things like specific image requirements, comprehensive information about cast and crew, and no native captioning feature, therefore requiring third-party involvement/expense. Videos also don’t appear almost immediately as they do on YouTube, rather it could take 3-5 days for them to be live. I haven’t read all of AVD’s terms and conditions thoroughly, but there may be other drawbacks relative to YouTube. Another looming issue is how Amazon will handle copyright protection, something YouTube has addressed with Content ID.

Add it all up and it’s clear that AVD is not yet a serious competitor to YouTube. Of course, given Amazon’s vast resources and strategic prioritization of video, over time, Amazon could certainly become more competitive with YouTube. But it’s also worth keeping in mind that YouTube itself is continuing to grow and innovate, raising the competitive bar. Bottom line, Amazon has taken on a very significant task in attempting to challenge YouTube. Time will tell just how committed it is to success.