Can Netflix beat YouTube?

This week, Netflix cut a thousand jobs and replaced its Chief Content Officer, Bela Bajaria, the person who had been deciding the platform’s content for the past ten years. This was a significant blow, widely seen as the start of a ‘crisis’ for the streaming service. The cuts were, in fact, justified by disappointing results in terms of subscriber numbers and user engagement. As for its share price, it has lost around 40 per cent of its value over the past year.

In reality, this picture was not entirely new. A few months ago, Bloomberg had revealed that the second seasons of Netflix series had long had a much smaller audience than the first, a sign of lack of interest in the long term and a now chronic inability to build projects that last. At this point, some might ask: what about Stranger Things? What about Wednesday? What about K-Pop Demon Hunters?

Of course, there are exceptions, but they are rare in a service that, over the years, has moved away from quality and embraced content similar to reality TV shows. In recent years, Netflix has also focused on video games and video podcasts in an attempt to diversify its offering, only to stop talking about them in recent weeks, as Peter Kafka wrote in Business Insider.

Reality shows, games, podcasts. Diverse content that should generate more engagement but which, in the long run, may not justify paying a monthly subscription, especially given all the competition from other streaming services. The best-known competitors are Amazon, Disney and the giant that will emerge from the merger between Warner Bros. Discovery and Paramount Skydance (i.e. Paramount+ and HBO within the same group, alongside CNN and many other players in the sector). However, it is not the other streaming platforms that Netflix fears, but a much larger, more powerful and harder-to-define entity: YouTube.

By the way, how would you describe YouTube to an alien? A site where you can upload videos? That’s the right answer, but it’s also incomplete and now rather out of date. After all, it’s no longer 2007: anyone wanting to upload videos online has a wide choice of services. No, YouTube is now something much bigger and more complex – an endless catalogue of content, fuelled by creators who publish there for free (or rather, to receive a share of the advertising revenue, even though the business is driven by sponsorship).

YouTube is there, free of charge, and contains everything from dreadful clips uploaded by 12-year-olds from every corner of the world to the most professional content. From 2029, the platform will broadcast the Oscars live and is increasingly focusing on sports rights: YouTube is a blob that absorbs everything and, above all, influences everything. It is hugely popular among young people, for whom it is everything, but also among older generations: just ask your parents or grandparents. YouTube is television, and in an increasing number of markets it is the most-watched streaming service on the small screen at home.

So, what can Netflix do to respond to YouTube? One might be tempted to say ‘focus on quality’, at the risk of sounding rhetorical. Because Netflix, as mentioned, has effectively distanced itself from a certain notion of ‘high-brow’ content, and did so deliberately: it was part of the strategy to secure greater engagement and more subscribers. But it was a race to the bottom that YouTube was bound to win. Ryan Broderick noted this in the Garbage Day newsletter: when Netflix turns to reality TV, it loses its sheen – it loses its ‘aura’, as young people would say – whilst when YouTube tries to put on airs, it ends up looking more prestigious.

It is also worth emphasising that investment in quality, however commendable, is no guarantee of success. After all, YouTube itself is not succeeding because of the quality of its content; it is succeeding because it is a platform where everything happens and where communities can form and grow. This last point also explains the partial failure of video podcasts on Netflix: for fans of these shows, comments are everything, and on Netflix there are none. Some content cannot survive the loss of its social element.

What is certain is that Netflix needs to update its mission and its challenge, because the battle against television has been won – in the sense that ‘old’ television has lost. But it was YouTube, not Netflix, that crossed the finish line first in a photo finish.