So did Netflix just win the latest round of the streaming wars?

I see them as winning the streaming wars.

Netflix, the great media disrupter, a company that turned the entertainment industry on its head.

In light of Netflix's ability to just be and be the king in this sandbox.

As established media companies struggled to turn a profit on their own streaming services, many pundits crowned Netflix the winner in the streaming wars, the OG of subscription streaming, the king of digital content.

I always say the crown as a program may be over, but it has been crowned the most successful media company and most valuable, and it will continue.

Netflix makes up more than 7% of total TV usage in the U.S.

But surprise, it's technically not winning the streaming wars.

I'm going to spend the next 50 hours buried alive in this coffin.

You're going to lose!

I've got to be honest, I kind of think I can do expert.

No, no, no, no.

The most-watched streaming platform is YouTube.

Hi, friends!

I kind of have a different take on this. 3, 2, 1.

YouTube, of course, isn't new.

You know that already.

It was founded in 2005.

But what is new is its accelerating domination of the living room.

More than half of all YouTube viewing is now done on a traditional television.

The Alphabet-owned video streaming platform has led the entire streaming space in overall time watched for 15 consecutive months, ahead of Netflix.

And if you zoom out to the entire TV world, we're talking cable, broadcast, and streaming.

YouTube is still watched more than every other media company's platforms other than Disney, which owns Disney+, Hulu, ESPN, ABC, and other cable networks like FX and NatGeo.

Whether we're talking Disney+, or Hulu, or Paramount+, you look at who's still growing, growing the greatest share year over year.

It is insane that YouTube is still dominating the growth rate, even despite their size.

Any competitor for time and attention is obviously not good for streamers.

If YouTube is already this far ahead and growing, should other streamers be worried?

Even Netflix?

It's been almost two decades since Netflix's move to online streaming kicked off a massive shift in the entertainment industry.

A race to the top that would eventually be deemed the streaming wars.

Currently, almost every major media entity is represented in the space in one way or another, all vying for the attention of a massive digital audience dominated by younger viewers.

So many media executives that we would run into is they always sort of try to silo and say, OK, there's this thing called premium content.

That's what you make for TV or for streaming.

Then there's this other stuff that you watch on YouTube.

Now, you may be thinking, isn't YouTube a social media site?

Is calling it a streaming service comparing apples to oranges?

When you think about time spent, it's absurd to separate it into different buckets.

Whether you're watching the NFL, or whether you're watching TikTok, or whether you're watching YouTube, it doesn't matter.

It's just time.

When Google bought YouTube back in 2006, it paid $1.65 billion for a platform that was only a year old at the time.

Fast forward to today, and analyst Michael Nathanson says YouTube alone could be worth $400 billion.

That's not only worth more than Netflix, it's worth more than Disney and Comcast combined.

But YouTube is still the 800-pound gorilla in the space, and I do believe they're a pretty unstoppable juggernaut.

Globally, YouTube is the second most visited website in the world, sitting just behind its parent company, Google, in monthly traffic.

So they have two modalities, the traditional horizontal video, they have the vertical video, they have the personalization engine that I think is kicking in in a big way.

That is increasingly one of the biggest and fastest growing platforms we're on.

And when people are sitting down to watch TV, they're increasingly turning on YouTube.

And you see a lot of what you'd expect, which is that they are watching longer sessions, longer content.

A lot of our biggest creators are starting to make longer content for the TV explicitly.

More than a billion hours of YouTube content is watched on TVs every day, with 150 million connected TV viewers tuning in each month.

The amount of YouTube creators who say the majority of their watch time comes from TV climbed more than 400 percent in just three years.

We're not talking about your mobile phone, your laptop that I'm sure you see your kids using all the time.

But on the biggest screen in the house, the TV, 25 percent of the streamed content is coming from YouTube.

Every executive has to be paying attention.

Another major factor behind YouTube success is the cost or lack of it.

While younger audiences have shied away from $100 per month for cable TV, nothing is more appealing or user friendly than free.

YouTube makes a lot of money because they keep it free.

The minute you put up that wall, a literal paywall between the product you're trying to push and the people you want to push it to, people aren't going to care.

And that brings us to YouTube's other secret weapon.

It's content and content creators.

They're producing at a level that is consistent with what we've traditionally expected from Hollywood.

The beauty of it and the evolution of what the platform has become is that whatever you want to find on YouTube, you will find it.

This is wild.

YouTube's bread and butter is its user generated content, or what YouTube likes to call creator led content.

YouTube sees about 3.7 million new videos uploaded to its platform daily.

That's more than 271,000 hours of fresh content each day.

The responsibility of content generation falls solely on creators, not the company, saving YouTube billions of dollars.

Our business is much more about scale and audiences and technology, and that's the base that we came from.

And that's why you see us typically not also getting into the traditional studio business.

From the creator side, it's something that I think is very, very exciting in the sense of creators can have their work viewed on a television.

And the only barrier to entry is the upload button.

For years, traditional media executives viewed YouTube's creator led content as low quality, thinking, sure, it's free, but eventually users will want to watch something with more substance.

But recently, the evidence suggests otherwise.

A 2023 survey found the majority of both Gen Z and younger millennials say user generated content is their preferred entertainment method.

According to a Pew Research study, 71 percent of teens say they use YouTube daily, with one in five claiming they're on YouTube almost constantly.

I grew up on YouTube.

I think that's a big difference is I've seen the way that it has evolved and it has filled in the space between the streaming platforms.

I think there's a lot of like viewers fatigue.

There's so much media out there that when you find a person that you really like or that you really resonate with or a type of content that you like, it fits into a routine of your life.

Part of the draw is reliable, consistent contact, like a relationship, even if it's through a screen.

YouTubers are available to their audiences.

Viewers aren't waiting for new seasons or renewals of their favorite series.

And comments and analytics mean creators get real time feedback on what is and isn't working.

During COVID, with millions of people stuck in their houses around the world, YouTube provided people with something more than just passive content.

It gave them social connection.

People feel like they know me because I'm a friend to them.

They can throw me up on the TV and I'm sharing parts of my life.

I'm sharing my opinions, what I'm doing every day.

A lot of people work from home now.

It's just throwing something in the background that is it's not risking missing out on a chapter.

It's just for company, to be honest.

What I've appreciated about being a YouTube creator is having the opportunity to iterate, create content and receive feedback from an audience immediately.

We have so many creators like Red and Link, Jimmy Donaldson, MatPat, people who have spent years building their channels into something where you watch those channels and qualitatively can't tell the difference between what we think as traditional and what we think as what you would expect.

Potentially from digital.

So if you think about it from the creator standpoint, they are getting something that no other platform can give them, which is massive global reach on every device, in every language, all over the world.

YouTube's revenue largely comes from advertising.

And while traditional media companies have struggled in recent years to attract ad dollars as cable TV subscriptions have declined, YouTube has soaked up the revenue.

In Q1 this year, YouTube saw ad revenue growth of 21 percent year over year.

YouTube's global advertising revenue in 2023 was around $31.5 billion.

To put that in perspective, Paramount Global, one of the largest entertainment companies in the world, had total revenue in 2023 of $29.6 billion.

That's for the entire company, not just advertising.

YouTube shares its profits with its creators.

Over the past three years, YouTube's partnership program has paid out $70 billion.

Why would I create a show and sell it to a network when I could just put it on YouTube?

You're self-funding, but if the money you're making from AdSense is going right back into your content to make more money, why do you even have to contact that third party?

Because what we're trying to do here is not like take what's working on TV and throw it on YouTube.

We're trying to iterate on it.

We're trying to be additive to it, put our own spin on it and ultimately develop our own version of storytelling.

Putting yourself onto Paramount Plus would be like a death sentence to these creators because you would be constricting the visibility to such a small level.

It's unclear if YouTube's still growing popularity presents an existential crisis to traditional media, but it's at least worth considering that streamers, including Netflix, may soon need a YouTube strategy to address changing consumption habits, especially among younger viewers.

Can you create a competitor?

I'm sure you could.

It's certainly not in the DNA of any of these companies.

Now, that being said, you are seeing talent that grew up in the UGC world start to make inroads into the streaming world.

You need to make sure you've got the scale, you need to make sure you've got the technology capability, and you need to make sure you've got the balance sheet.

And there's probably only a couple of companies that can do that.

Definitely having an impact on traditional television now, then you layer on things like Netflix and Amazon Prime doing advertising now.

And, you know, you have a recipe for a very, very difficult next decade for traditional linear television.

Not that long ago, traditional media companies saw Netflix as a companion service rather than a competitor.

Then Netflix got so popular that it started to compete for shows and movies against the media companies who supplied it with content.

It's fair to wonder, is YouTube ultimately a companion or a competitor?

We'll presume that the other streamers are our competitors.

They're some of our best partners, right?

Because I think the strategy I see them leaning into is using supplementary distribution platforms like YouTube to get out their content, their marketing, their engagement with younger people and younger audiences.

At the end of the day, Disney is a storytelling machine.

And we use YouTube, that short form video on YouTube, as more of a promotional device.

Now, you can still make money on it.

Now, you can put a trailer for, you know, Frozen 2, a two minute trailer on YouTube and actually have advertising attached to it and sponsorship attached to it.

So you can kind of kill two birds with one stone.

You can promote your product and you can monetize on YouTube.

This video you're watching right now is an example of this exact strategy.

CNBC, a cable television network, utilizing YouTube to expand its reach.

Think about how often you see SNL or Late Night with Jimmy Fallon clips go viral online.

YouTube is expanding reach, which is great for media companies.

But YouTube is also competing against these same company's streaming services.

And the more time you all watch YouTube, the less time you watch everything else.

Sports is also subject to the same phenomenon, where young people are watching highlights and highlights only and the whip arounds like the Red Zone network.

What we're seeing from all of these traditional media companies is they don't have enough content and it's too expensive to produce the types of premium content at scale that they need.

And so maybe YouTube or maybe the UGC economy is a place they look not to create their competitor, but as a lower cost way to add content to their services.

The magic of YouTube is the ability to have all of these types of content and all of these business models side by side in one place because we originated from the creator ecosystem.