Netflix competes with YouTube for viewership and attention, but according to the streamer’s co-CEO, the two companies have a symbiotic relationship. During a video call that followed Netflix’s Q2 2024 earnings call, Ted Sarandos praised YouTube as a leader in TV viewership and argued that the platforms fill different niches in the digital content landscape.
Sarandos discussed YouTube in response to a recent Nielsen report. The data showed that YouTube accounts for nearly 10% of all TV viewership in the United States, while Netflix led all subscription services with an 8.4% share.
That data would suggest that Netflix and YouTube are rivals, but Sarandos doesn’t see it that way. He admitted that Netflix does “compete with YouTube in certain segments of their business,” but he believes that the companies’ respective specialties allow them to “feed each other pretty nicely.”
Sarandos’ co-CEO, Greg Peters, elaborated on his partner’s point. Citing Netflix’s 107 Emmy nominations, Peters argued that his company fills a need for “amazing, spectacle movies and TV shows” while also aiding creators by sharing “the risk that’s inherent in bringing those stories to life.” One creator who recently leveled-up to streaming is TikTok star Loren Gray, who stars in the upcoming Netflix original film Incoming.
As Netflix assumes risks on behalf of creators, YouTube provides an outlet for the streamer’s PR machine. Netflix’s official YouTube channel reaches more than 28 million subscribers. “Our teasers and trailers and behind the scenes, clips, and all those kinds of things are incredibly popular on YouTube,” Sarandos said.
Despite the differences between Netflix’s business model and YouTube’s, the former company is slowly adopting an ad-supported model. During the second quarter of 2024, Netflix’s ad-supported subscription earnings grew by 34% year-over-year. Thanks in large part to that surge, Netflix exceeded projections by hauling in $9.56 billion in quarterly revenue.
Netflix boosted its ad tier by phasing out the basic monthly plan that cost $11.99 per month. Netflix eliminated that plan for new customers a year ago, and existing subscribers are now getting kicked off as well.
Another change affecting the ad-supported tier concerns Netflix’s sales team. Snap and Hulu vet Peter Naylor, who was one of Netflix’s first executive hires ahead of the launch of its ad tier, has now departed his role. Jeremi Gorman, who joined Netflix alongside Naylor, left the company last year.
All moves considered, Netflix is currently in the midst of a sea change. The streamer will stop breaking out subscriber numbers in 2025, and investors are preparing for that shift. On the heels of the Q2 2024 earnings report, Netflix stock fell by approximately 21 dollars per share.
Netflix faces an uphill battle if it wants to continue beating earnings expectations. If the streamer’s co-CEOs get their way, YouTube will remain a key cog in Netflix’s business plan — not a barrier in the way of success.
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