The Medium
Monday AM Briefing: Netflix ($NFLX) May Not Have Any Answers For YouTube Shorts
PARQOR is the handbook every media and technology executive needs to navigate the seismic shifts underway in the media business. Through in-depth analysis from a network of senior media and tech leaders, Andrew Rosen cuts through what's happening, highlights what it means and suggests where you should go next.
In Q4 2022, PARQOR will be focusing on four trends: this essay is on the trend of "Hollywood’s future lies in the creator economy, what happens next?"
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My favorite section in every Netflix quarterly letter to shareholders is the discussion of their competition and threats to growth. YouTube, Epic Games an its popular multiplayer game "Fortnite", TikTok and Disney’s Hulu have had pretty consistent mentions over the years. In fact, Netflix highlighted Fortnite as a competitor back in January 2019, almost three years before it launched its own gaming offering.
There was also the surprising sales pitch last July of “we have a long runway for growth” built off of Nielsen’s The Gauge, which highlighted how “streaming represents just 27% of US screen time” and how Netflix’s share was “just 7% of US TV screen time.” It was surprising because all growth trends then were pointing towards a slowdown, and they came true.
At the time of that letter, YouTube’s share was 6% of US TV screen time or 85% of Netflix’s share. But, Nielsen's most recent The Gauge had YouTube and Netflix neck-and-neck in August 2022 (and YouTube is on 135MM Connected TV (CTV) devices in the U.S.). And, as I highlighted recently in September’s A Short Take on YouTube Shorts, “YouTube seems poised to capture more valuable CTV and streaming ad dollars with ‘premium content’ at a time when Netflix and Disney are trying to build a story for advertisers at a smaller scale.”
Given that Hollywood’s future seems to lie in the Creator Economy - one of PARQOR’s themes for Q4 2022 - it’s worth asking what Netflix will and won’t be saying about this evolving competitive threat.
Key Takeaway
Netflix will have less to offer advertisers than YouTube its closest competitor on CTV screens, and increasingly less as YouTube's bet on Shorts creators shifts to Connected TVs.
Total words: 1,400
Total time reading: 5 minutes
The Competitive Threat Has Evolved
It’s an interesting question of what exactly is the competitive threat that YouTube Shorts presents for Netflix. The obvious challenge seems to lie in CTV where YouTube has nearly 2X the devices to Netflix’s current U.S. subscriber base (an estimated 67MM), ...