Next in Media Episode Summary: Breaking Down the Netflix vs YouTube Streaming War

Release Date: February 13, 2025
Host: Mike Shields
Guest: Lucia Moses, Senior Correspondent at Business Insider

Introduction

In this episode of Next in Media, host Mike Shields engages in a comprehensive discussion with Lucia Moses, a seasoned correspondent at Business Insider. The conversation delves into the evolving dynamics between major streaming platforms like Netflix and YouTube, the shifting strategies of industry giants such as Disney and Amazon, and the broader implications for creators and the media landscape.

Netflix and YouTube: Shifting Strategies

Lucia Moses highlights Netflix's evolving relationship with YouTube, noting a significant shift from viewing YouTube as a competitive threat to recognizing its potential as a platform for creator collaboration. She references the success story of Cobra Kai, which originated on YouTube before becoming a hit on Netflix, illustrating the symbiotic potential between the two platforms.

"They have evolved in how they talk about YouTube. More recently, I've noticed them talking about it in more conciliatory terms, like, 'Yeah, we have our strengths, we're top shelf, premium long form content and YouTube is shorter form.'"
— Lucia Moses [02:18]

Mike Shields emphasizes the importance of authenticity in content creation, questioning whether YouTube's diverse creator base can seamlessly translate to Netflix's long-form content demands.

"The authenticity, the unpolishedness is sort of a part of the appeal, a part of what it is."
— Mike Shields [04:16]

Lucia concurs, noting that previous attempts by Netflix to produce talk shows felt overly polished, detracting from the genuine connection audiences seek.

"They'll take somebody as is their practice. They'll really produce it. People want to see creators just kind of do their thing."
— Lucia Moses [04:12]

Netflix's Advertising Plan

The conversation transitions to Netflix's foray into advertising. Lucia shares insights into Netflix's incremental approach to introducing ads, noting a strategic price increase for their ad-supported tier to encourage adoption.

"Over half of the people who sign up for Netflix now in the markets where the ad tier is available are taking the ad tier."
— Lucia Moses [05:32]

However, she points out that despite optimistic signs, Netflix's ad-supported user base remains modest compared to competitors like Disney and Amazon.

"The estimate is like 45, 50 million US users on the ad tier. That's bigger than it used to be, but still small from an advertiser perspective."
— Lucia Moses [05:58]

Mike contrasts this with Amazon's aggressive expansion into advertising, questioning whether Netflix can keep pace.

"Amazon turned on advertising for everybody overnight, whereas Netflix has been trying to do it gradually."
— Mike Shields [06:21]

Lucia anticipates Amazon's continued technological advancements in advertising, potentially altering the competitive landscape further.

"They are going to be turning things on like programmatically this year for the US with their own tech now."
— Lucia Moses [06:46]

Amazon's Creator Economy Push

The discussion moves to Amazon's investment in the creator economy, specifically referencing their partnership with prominent YouTuber Mr. Beast and the launch of Beast Games. Lucia explains that Amazon's strategy is part of a broader trend among global streaming platforms to attract younger audiences through creator collaborations.

"The Amazon and Beast Games, the interest in working with creators has been going on for a while. The big million dollar deal with him really puts it on the map."
— Lucia Moses [11:03]

Mike expresses skepticism about the cultural impact of these initiatives, questioning whether figures like Mr. Beast represent a scalable model for broader adoption.

"There's no other Mr. Beast. There's only a handful of creators who really have what they call like billboard quality."
— Lucia Moses [12:15]

Evolution of Podcasting and YouTube's Role

Lucia explores the expanding role of podcasting in the media ecosystem, noting YouTube's efforts to blend audio and video podcasting to attract advertisers. She suggests that this integration could re-energize podcasting's appeal beyond its traditional audio-only format.

"YouTube making a lot of noise, showing that they are not only a home for podcasting, but for video podcasting... could lead advertisers to give these podcasts a second look."
— Lucia Moses [07:26]

Mike echoes this sentiment, emphasizing the habitual nature of podcast consumption as a draw for consistent advertising opportunities.

"It's habitual, which brands like because it's television... audiences are accumulated consistently."
— Mike Shields [08:09]

YouTube's Rising TV Consumption

In a notable industry shift, Lucia discusses YouTube's recent data indicating that the majority of its viewing time now occurs on TV platforms rather than desktops and mobile devices. This milestone suggests a significant shift in viewing habits and presents YouTube as a formidable contender in the traditional TV space.

"YouTube has been, you have some advertisers... it's not really TV. So this is another moment for YouTube to drive home that this is where TV dollars should be going."
— Lucia Moses [08:31]

Mike considers the implications of this shift for brand safety perceptions, pondering whether YouTube can mitigate concerns that have traditionally placed it below other premium platforms in advertisers' eyes.

"Brand safety seems like it's a little bit out of vogue right now."
— Mike Shields [09:45]

Brand Safety on YouTube

The conversation delves into the nuances of brand safety on YouTube. Lucia differentiates between severe content issues (e.g., hate speech) and more subjective concerns (e.g., content appropriateness), suggesting that the latter may be easier to navigate in the current advertising climate.

"There's two kinds of brand safety... terrible stuff like Nazis and hate, and then there's just not appropriate for our brand... not premium enough."
— Lucia Moses [10:06]

Mike notes that the evolving landscape may lead advertisers to become more flexible regarding brand safety.

Amazon's Beast Games and Hollywood's Response

Lucia examines Amazon's Beast Games initiative, co-founded with YouTube star Mr. Beast, positioning it as a strategic move to capture younger, creator-driven audiences. She observes that while the endeavor has achieved significant visibility, its long-term cultural impact remains uncertain.

"Creators who want to own their own stuff and have total control is very different from traditional models."
— Lucia Moses [12:15]

Mike points out the uniqueness of Mr. Beast's influence, questioning the replicability of such partnerships across the industry.

"How many other kinds of deals are going to be in that territory is a good question."
— Mike Shields [12:35]

Disney's Streaming Strategy and Market Position

Shifting focus to Disney, Lucia discusses the company's recent financial performance, noting profitability alongside a decline in Disney Plus subscribers. She highlights the challenges Disney faces in balancing growth with profitability, especially amidst a fragmented sports streaming strategy.

"It's tricky. It shows that it's hard to have profitability and streaming growth at the same time."
— Lucia Moses [13:19]

Mike echoes concerns about Disney's strategy complexity, particularly in the sports domain, and its potential confusion among consumers.

"Where do you go? There's all these skinny bundles now. They feel incomplete."
— Mike Shields [15:34]

Lucia anticipates potential consolidation in Disney's offerings to simplify the user experience, reflecting broader industry trends.

"At some point there's going to be some consolidation."
— Lucia Moses [15:39]

State of Hollywood and Decentralization of Creator Economy

The dialogue turns to the broader state of Hollywood, with Lucia addressing the ongoing shift of production outside Los Angeles. She attributes this trend to attractive financial incentives offered by other regions and the decentralization spurred by the creator economy.

"Other states, other countries, Canada, overseas... those incentives are the biggest driver of where productions are going to."
— Lucia Moses [17:51]

Mike observes the fragmentation of the creator economy, noting notable creators like Mr. Beast operating outside traditional Hollywood hubs.

"It seems very fragmented."
— Mike Shields [18:30]

Lucia acknowledges that while Hollywood remains a powerhouse, the rise of creators in diverse locations signifies a shifting power structure within the media industry.

Future Trends in Ad Market and Industry

As the episode nears its conclusion, Lucia shares her outlook on upcoming industry trends. She anticipates Nielsen reasserting its relevance, ongoing currency wars in granular advertising purchases, the decline of cable networks, and significant mergers and acquisitions within ad holding companies.

"You've got these legacy networks being spun off. You've got mergers of these two ad holding companies... a lot of people being out on the street as a result."
— Lucia Moses [18:44]

Mike adds that the political climate, such as the "Trump hates media" factor, may influence deal-making dynamics in the near future.

"It's a deal-friendly environment, but then you have the Trump hates media factor."
— Mike Shields [19:19]

Conclusion

Mike Shields wraps up the episode by expressing gratitude to Lucia Moses for her insightful analysis and to their partners at View Planner. He encourages listeners to engage with the podcast through ratings and reviews, promising continued in-depth discussions on the evolving media landscape.

Notable Quotes:

1. "They have evolved in how they talk about YouTube. More recently, I've noticed them talking about it in more conciliatory terms..."
   — Lucia Moses [02:18]

2. "The authenticity, the unpolishedness is sort of a part of the appeal..."
   — Mike Shields [04:16]

3. "Over half of the people who sign up for Netflix now in the markets where the ad tier is available are taking the ad tier."
   — Lucia Moses [05:32]

4. "They are going to be turning things on like programmatically this year for the US with their own tech now."
   — Lucia Moses [06:46]

5. "It's tricky. It shows that it's hard to have profitability and streaming growth at the same time."
   — Lucia Moses [13:19]

This episode provides a thorough exploration of the competitive strategies among leading streaming platforms, the interplay between traditional media and the creator economy, and the evolving challenges and opportunities within the advertising landscape. Listeners gain valuable insights into how major players like Netflix, YouTube, Amazon, and Disney are navigating a rapidly changing media environment.