How Netflix is Hurting Youtube

Time to delve back into the world of video. Oh, and don’t forget to watch SharkTank on ABC this friday at 8pm/7pm ..

It has taken some time but Netflix (NFLX) and Youtube have each taken their position in the video entertainment world and I get the feeling that Youtube is not too happy about it.

On Youtube you can maybe change the world. On Youtube you can be discovered and help discover the next Justin Bieber. On Youtube, if one of your videos goes viral, you can make tens of thousands of dollars, and if you can replicate the feat of popularity, you can make hundreds of thousands of dollars annually. Those are real commission dollars.

But wait, there is more good from Youtube. Any one around the world can get Youtube to subsidize the cost of hosting their family/wedding/team/business/class/personal videos. Hopefully perpetually. These are unique, honorable, impactful and expensive roles that Youtube has chosen to under take.

But if you want to veg out and watch a TV show or movie, the vast majority of people just turn on the TV. About 11mm people turn on Netflix..

The lines of division between Youtube, Netflix and traditional TV have become crystal clear.

Traditional TV is where you get entertainment in real time. Live major sports, the latest movies on VOD, original episodes of your favorite TV shows, all in the highest, no – buffering quality available to your TV. Plus they have smartly opened the door to TV Everywhere and in home tablet streaming so that there is a pay once, watch anywhere opportunity for their content.

Netflix is where you get streaming access to a growing library of thousands of TV shows and movies, and soon, a smattering of original content as well. Netflix has done an extraordinary job of being available easily on any and every device known to the internet. 11mm (those streaming, not all netflix users) or so users have happily paid Netflix $7.99 per month for this service and it shows no signs of slowing down.

Youtube is the counter-balance to Netflix and Traditional TV. Youtube is where you know 99pct of what is on the site is pure junk that has no relevance to you. It’s like walking through the bargain bin at Walmart hoping to find something that might interest you, knowing the price is right. Youtube is Community Access Television for the world.

Remember back in the day when Cable had A and B sides of the set top box? You got all the good channels on the A side, and all the community access stuff was on the B side? Youtube is the aggregation of every B side of every cable system in the world. That is not a knock on Youtube. It just ain’t what it ain’t.

The B side of cable was community driven. The B side of cable was an open door for anyone with access to a video camera. The cable company would let you schedule shows and put them on their schedule. Like Youtube, back in the day, there were shows that would break out and create mainstream opportunities.

I can’t help but include this paragraph from the history of Public Access TV in Manhattan:

“Public access has a fundamental PR problem, which one producer summed up with this rhetorical question: “If anybody can do it, who would want to?” I don’t think there is any particular personality type that is drawn to public access; as with anything, it attracts good, bad, and ugly. But these people (each of whom I met by chance through the help of someone else I interviewed) have some things in common. All are creative, and all seem to have a thick skin and a high threshold for frustration. None were paid for their shows. Most actually shelled out their own money for studio time. Three admitted to suffering career setbacks later as a result of appearing on public access. They approached their work in television with a level of intensity and passion that only exists in the realm of avocations and came away with uniquely philosophical perspectives on the nature of television.”

The same thing could easily be said about Youtube producers today. And that is a business problem and social opportunity for Youtube. They have become Community Access for the Internet. That is a brilliant opportunity if you are trying to change the world or create huge communities. That is a huge challenge if you are trying to maximize earnings per share for your parent corporation. People won’t pay a subscription fee for any of it and most of it will never pay for itself with advertising because most of it will never be seen. It is the B side of the content world.

Which is exactly why I believe Youtube is channeling 1998 and gearing up to do quite a bit of live streaming. They don’t like being the third entertainment option. They don’t like being the “b or c side of content”. They are hoping live streaming can change the standings.

Offering everyone in the world the opportunity to stream whatever they want, live to the rest of the world, could actually change the world. But it won’t change the content stratification challenge Youtube is facing now. It won’t change how people see Youtube relative to traditional TV and Netflix.

The reality is that both cable/telco/sat distributors on your TV and Netflix are moving faster in terms of the introduction of technology (TV Everywhere/Remote DVR/IPad and multi device support) and the introduction of new and original high value content than Youtube. I think Youtube is hoping that live streaming will change that. It will be interesting to see if it does.

Personally, I’m not optimistic. But hey Youtube, call me. I’ve been there, done that and I can help you out.

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