Can Netflix become YouTube before YouTube can become Netflix?
The two apps are starting to look a lot more alike as Netflix chases creator content, podcasts, and short-form video, and YouTube pitches itself as a destination for TV advertisers and Emmy-worthy shows. They are also both diving into live sports.
The top streamers are all trying to create a “super app,” said Scott Purdy, a media sector leader at the consulting firm KPMG US.
“They’re just trying to pick off the best things, whether that’s creator-driven stuff, whether that’s games, whether that’s better customization around advertising, to create an ecosystem that you never have to leave,” he said.
The pair is even dueling over awards shows — Netflix is streaming The Actor Awards (formerly the Screen Actors Guild Awards), while YouTube is set to host the Oscars beginning in 2029.
The battle for attention doesn’t come cheap.
Netflix and YouTube are spending billions of dollars a year on content, either through production and licensing deals or advertising-revenue sharing, as they duke it out for the top spot in Nielsen’s monthly ranking of US TV viewership.
As content becomes less differentiated, the companies that do a better job at customizing the viewing experience will have an edge, said Frank Albarella, a US media and telecommunications leader at KPMG US.
“What do you see when you fire up your homepage?” he said. “Are they doing a good job at pointing it to certain things? That’s always important.”
Price will matter too, he added.
Right now, that’s a key difference between paid Netflix and free YouTube. (Though YouTube has a paid, ad-free version, and there are periodic rumblings in the analyst community that Netflix should launch a free tier.) There’s also the fact that Netflix pays money up front for content, while YouTube splits ad revenue with creators.
These differences have led Netflix to own higher-budget, scripted TV, while YouTube dominates influencer content and the long tail.
Both have been signaling their desire to make inroads into each other’s traditional turf, however — though the extent to which they’ll be successful remains to be seen.
The streaming wars are now a head-to-head fight
A decade ago, few would have guessed that Netflix and YouTube would be the final showdown in the streaming wars. Netflix’s co-CEO Ted Sarandos said in 2013 that the company’s goal was “to become HBO faster than HBO can become us.”
Back then, Netflix didn’t have an advertising business. Today, it knows its biggest task is to drive watch time. The company’s North Star has shifted to “engagement,” which it has called the “best proxy for customer satisfaction.“
Sarandos told investors last year that the streamer is the best place for premium content “as defined by fans,” not critics. It isn’t HBO tastemakers that are driving the bulk of TV viewing. Many spend their time in social feeds, watching influencers bake bread or do trick shots on basketball courts. Just under half of Gen Z and millennial viewers consider watching social media videos to be the same as watching TV, according to a Deloitte report from last year.
To win, Netflix is looking to offer a mix of cable TV, TikTok, and YouTube-style fare. It’s not alone. Other streamers seem to be realizing they need to offer more in their apps to compete. Disney and Paramount are exploring short-form video feeds and free tiers to expand their audiences and drive up engagement.
“These streaming platforms and the social platforms are moving towards the same center of gravity,” Albarella said. “We call it a battle for audience attention or engagement, and almost like a new category called creator-driven television.”
This month, Netflix said it’s adding three to 20-minute videos from the likes of Bon Appétit, Variety, and Cosmopolitan — the type of short content that people binge-watch on YouTube. It’s adding new videos from YouTube creators The Stokes Twins, Rhett and Link, the food influencer Meredith Hayden, and other social stars like Salish and Jordan Matter.
YouTube, meanwhile, is now letting creators organize their videos in TV-style series, offering seasons and episodes for viewers to burn through. The company said more users watch YouTube on television than on computers or phones, and it’s pitching shows from top creators like Kareem Rahma to advertisers as TV buys.
Ultimately, all the media and social platforms have the same goal: to keep us watching.
“There’s only so many hours in a day, and everyone is competing for amounts of attention,” Purdy said. “They’re all trying to figure out how to monetize that attention effectively.”
The biggest question mark is the future of prestige scripted content. YouTube has traditionally struggled in this area, but if younger generations spend less time watching it, that might cease to be such an edge for Netflix.
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