Netflix Can't Afford to Ignore Creators Anymore
Plus, the creator attribution gap
This week, YouTube made some noise in the ad/media world with CEO Neal Mohan’s annual missive on the state of the platform.
Among the highlights was Mohan’s contention that “YouTube will remain the epicenter of culture”, and of course the eye-popping news that the majority of YouTube’s watch time is on TV, rather than desktops or mobile devices.
That, coupled with YouTube’s ongoing streak leading the streaming share numbers within Nielsen’s The Gauge report feels like a landmark moment in streaming - on that no one in the TV business can afford to ignore.
Of course, Netflix would surely grumble about that ‘cultural epicenter’ claim. Not only did the streamer just recently announce another killer quarter buoyed by surprising subscriber growth, it’s recently released season 2 of the global smash “Squid Game,” its got new seasons of “Stranger Things” and “Wednesday” on the docket this year, both of which will surely pop culturally.
So even as YouTube ascends, Netflix is doing just fine.
Except…it’s increasingly clear that Netflix (and really, everyone in big media) needs to figure out where they fit in the creator economy. Recently, Netflix snagged the toddler beloved, parents freaked out by Miss Rachel, who made her name on YouTube. And my old friend and colleague, Business Insider senior media correspondent Lucia Moses reported this week, Netflix is now eyeing deals with podcasters - many of whom are blowing up on YouTube.
I had Moses on my Next in Creator Media podcast this week to talk about the dynamic between Netflix and YouTube, and whether other big media companies will continue to try and snag creator deals. She said she’s noticed a tonal shift when Netflix execs talk about YouTube.
“They’ve evolved in how they talk about YouTube,” she said. “They've talked about it in the past as a threat. They know it's a threat to people's time. 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...short form and, you know, they, you know, obviously, you know, YouTube doesn't pay for its, its content.’”
Of course, while Netflix does drop $17 billion a year on content, you’ll hear YouTube execs loudly push back on the idea that they don’t ‘pay’ for content, considering the company says it paid $70 billion to creators over a three year period.
A lot of that cash is going back into content and production capabilities- as Mohan pointed out, more and more big YouTubers are building mega studios in their backyards.
So if you’re Netflix, do you cede this territory, and stick to the ‘pros?” It seems dangerous to ignore a whole sector of entertainment, even if you are succeeding with millennials and Gen Z with TV shows and movies.
As Moses noted, video podcasters make sense for Netflix for a number of reasons. They have big, habitual audiences - the kind of consistency that would indicate that fans will follow them. Plus, podcasts are generally advertiser-friendly, which would help with Netflix’s budding ad business.
“If you want to zoom out, it's just another form of episodic content, whether it's video or audio, it's appointment viewing,” said Moses. As long as Netflix doesn’t screw up what works about these shows. "They've talked about how, ‘we have this great history of, of finding creators, in other places and upping the game and bringing them to Netflix and making them successful.’”
Which could be a great model. But what people like about creators, is they are unpolished and authentic (generally speaking). Does Netflix want to treat YouTube as a minor leagues for new talent? Or should they try to replicate the creator/YouTube experience (comments, likes, etc.) on Netflix - which could be quite jarring in such a professional-looking environment.
“I think a criticism of the past stabs that they've taken at doing talk shows on the platform is that they'll take somebody and as is their practice, they'll really produce it,” noted Moses. “It'll look very slick and snazzy. And people want to see creators just kind of do their thing.”
Maximize your YouTube advertising with VuePlanner. As a member of the YouTube Measurement Program for Brand Suitability and Contextual Targeting, VuePlanner enables you to buy with confidence, clarity, and precision. Using advanced technology and AI-powered optimization, VuePlanner offers custom-curated contextual collections, exclusive content strategies, and transparent reporting for measurable, impactful results. Take control of your campaign performance—partner with VuePlanner now.
I wonder over time if Netflix (and really any of the big streamers) needs to find a way to cater to creators and viewers who want that raw look, and also want some communal elements. Which is very much not Netflixy - with its slick interface.
It’s just going to be tough to ignore the direct competition for the biggest screen in the house. At one point, when AT&T first bought Warner Media, leadership ruffled feathers when they talked for all its success, HBO wasn’t able to command the same kind of share of TV time that Netflix was achieving.
Now, Netflix may be facing the same worries, as YouTube becomes default TV for many - and TV time is finite.
“You see it coming, in the past year, YouTube became like number one in the Nielsen gauge, getting the biggest share of TV viewing,” said Moses. “It happens one month. That's one thing. It happens for six months in a row is another thing. When you pass these milestones, then I feel like, you know, there's really a tipping point.”
Creators Meet CFOs
The analytics firm CreatorIQ is out with its annual State of Creator Marketing report this week, and while there are lots of great nuggets to dig into, one data point really stood out to me:
While spending on creator media is way up - plus 143% over the last four years - that’s both good news and bad news for the sector. Because now that the dollars are getting more serious, so undoubtedly will the scrutiny on this spending.
Check out these contradictory figures:
“98% of industry leaders believe that creator content drives more ROI than
traditional digital advertising”
The No. 1 roadblock for brands in 2024? “Difficulty measuring creator performance.” 32% of brands surveyed cited this obstacle
It won’t be easy, particularly as there continues to be some debate about what creator media is ‘for' - awareness? Engagement? the endorsement power? Driving sales?
There would seem to be a huge opening for a bunch of creator attribution startups (i.e. creator media ad tech).