Streaming Media
article here
Netflix views video podcasts as an inexpensive way to expand
and diversify content, increase ads revenue and boost engagement – in
particular to stem churn between series. In doing so the streamer is taking a
leaf out of the YouTube playbook, including tapping creators to create new
formats or simply port existing shows to its platform.
Video podcasts, or ‘vodcasts’ is a burgeoning market increasingly
popular among younger audiences. According to Edison Research, 89% of Gen Z podcast listeners consumed
podcasts with a video element in 2024 and that YouTube captures 31 percent of
13+ users who prefer them in video format. YouTube is ranked the number one
podcast platform in the U.S. (with 400 million hours of podcast content
streamed on TVs in 2024) overtaking Spotify and Apple.
Forbes estimated that 100 million Americans listen to
a podcast each week last year. Some 650 million people are predicted
to listen to podscasts globally by 2027.
Strategic benefits
Video podcasts offer several advantages for Netflix. According
to analysts at Bernstein, the move
aligns with the streamer’s broader strategy to expand its total addressable
market (TAM) and boost user engagement.
Engagement is one of Netflix’s key focuses – alongside
revenue and profit – and was described by execs in
a 2024 letter to shareholders as the “best proxy for customer
satisfaction”.
“Penetration is nearing saturation in some markets, and
consumption per person has remained steady at roughly 60 minutes per day in
recent years. To sustain growth, Netflix needs to expand its TAM and drive
higher engagement,” Bernstein
wrote.
Apple and Spotify may dominate podcast consumption, but Bernstein
emphasize that Netflix doesn’t need to beat them. Instead, they believe Netflix’
goal is to diversify its content and create a broader entertainment
ecosystem.
“At the end of the day, it’s about ROI. Adding another
content category—one that could reach more subscribers and increase
engagement—would help drive ROI,” Bernstein stated.
Another benefit is that vodcasts are significantly cheaper
to produce compared to drama series or films. “Podcasts offer a more economical way to generate engaging
content,” writes investor Ian Shepherd at Forbes.
“This cost-effectiveness could allow Netflix to experiment with different
formats and creators while maintaining profitable margins.”
Regular podcast content could keep subscribers coming back
to the platform more frequently, potentially reducing churn and increasing
overall platform engagement.
“The ‘always-on’ nature of podcasts could help Netflix solve
one of its key challenges: maintaining subscriber engagement between major
series releases,” Shepherd says.
Chris Peterson, CEO of DWNLOAD Media agrees, telling Forbes
that Netflix could build vodcasts around licensed IP or original content with
built-in, engaged fan bases. “Imagine Netflix investing in a Friends
rewatch podcast with members of the cast, or deep-dive discussions around
evergreen favorites like Breaking Bad, The Office, or Suits - all
of which have seen massive second lives on streaming,” Peterson suggests. Squid
Game might be another golden opportunity.
Video podcasts are also a means for Netflix to expand its
ad inventory. “The platform could potentially offer advertisers more targeted
and engaging opportunities than traditional pre-roll or mid-roll ads,” per
Shepherd, “while providing creators with more control over their ad inventory
than they currently have on other platforms.”
Engaging social media creators
News that the streamer has been exploring talent to host
talk-based video podcast shows came from Business Insider, but the company had been heavily trailing
its move into different formats, including longer formats, fronted or created
by successful social media creators.
In an analyst
call following record quarterly results, co-CEOs Ted Sarandos and Greg
Peters said that talent could “graduate to” Netflix from social media services.
“Our goal here is to entertain all audiences, including
younger audiences who may be watching disproportionately more short-form
content,” Sarandos said. “The beauty is that those folks all love film and TV
shows as well.”
He added, “As eyeballs get pulled into other places, we
definitely want to be there for them as well. I do find that the short-form
services also are a great breeding ground for new storytellers.”
For example, Netflix is producing the children’s show Ms.
Rachel with educator and YouTube breakout Rachel Accurso; it is
remaking couples therapy reality show Blue Therapy, based on the show
debuted on YouTube channel Trend Centrl in 2021. This follows a
deal for UK creator’s The Sidemen’s reality show Inside after the
first series debuted on YouTube.
Lemonada Media co-founder and CEO Jessica Cordova Kramer
told Business Insider she “could see a world in which audio
only and vodcasts are streamed on Netflix so that they can offer an all-in-one
place to keep users on their platform for everything.”
Netflix also plans to introduce live voting for viewers
around live and event programming. “People already come to Netflix for
must-watch dating shows like Love is Blind and our behind-the-scenes sports
shows like Quarterback or America’s Sweethearts: Dallas Cowboys
Cheerleaders,” said Netflix Chief Content Officer Bela Bajaria in the
content showcase Next
on Netflix. “In the future we’ll be adding the ability to cast a vote live
right from your screen which will open up new opportunities.”
YouTube is television
Netflix is far from alone in attempting to bring in youth
audiences on the coat tails of creator followers. Amazon Prime Video reportedly
paid YouTuber MrBeast $100m
to create and front a new game show. Beast Games which launched before
Christmas has become Amazon’s most-watched
unscripted series ever, reaching 50 million viewers in 25 days. It
reached number one on Amazon in 80 countries.
With the “MrBeast-ification of entertainment”, as Vox’s
Rebecca Jennings put it,
the lines between content, entertainment, television and influencer have
blurred.
Calling out the “YouTube-ification of television” UK news
site The Guardian highlighted the naked attempt to prioritize attention over
anything like value (production or ethical) as a cause for despair.
It quoted a MrBeast director telling Time:
“These algorithms are poisonous to humanity. They prioritize addictive,
isolated experiences over ethical social design, all just for ads. It’s not
MrBeast I have a problem with. It’s platforms which encourage someone like me
to study a retention graph so I can make the next video more addicting.”
This has prompted a wider debate about what actually
constitutes television. YouTube CEO Neal Mohan is in no doubt.
“YouTube is the new television” he declared in a recent blog
post, backing this up with YouTube’s own stats that global viewers are
watching, on average, over 1 billion hours of YouTube content on TVs daily,
including 400m
hours a month of supposedly audio-only podcasts, and that TV is of
December 2024 the primary device for YouTube viewing in the U.S.
In previous earnings calls, Netflix bosses have signalled
their intent to improve its share of TV viewership in the US: Nielsen
data from its most recent monthly report, The Gauge, has YouTube at 11.1% and
Netflix at 8.5% among streamers in December.
TV has surpassed mobile and is now the primary device for
YouTube viewing in the U.S. (by watch time), and according to
Nielsen, YouTube has been #1 in streaming watch time in the U.S. for two years.
YouTube doubles down on ad formats, AI creator tools
That’s why YouTube plans to enhance the second screen
experience by enabling users to interact with content being watched on TV via
their mobile device, for example, to leave a comment or make a purchase.
It is also experimenting with a ‘Watch With’ feature which
enables creators to provide live commentary and real time reactions to games
and events. YouTube tested this feature last year with the NFL and plans to
experiment with other sports and types of content in 2025.
Mohan said YouTube will continue to introduce ad formats
that work “particularly well” on Connected TVs, like QR codes and pause ads.
The Alphabet division is also touting how its AI tools can
assist content creation. This includes auto dubbing, which automatically translates videos into
multiple languages and which is being made available for all creators in the
YouTube Partner Program.
Last year YouTube launched Dream Screen and Dream Track which
generate image backgrounds, video
backgrounds and instrumental
soundtracks for Shorts. Video generator Veo 2 is being rolled into Dream Screen soon, Mohan
said.
No comments:
Post a Comment