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How is Netflix different from YouTube from the product philosophy perspective?

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Netflix is a subscription based OTT platform which seeks to provide on the go entertainment to its subscribers by providing a wide array of licensed content. All you need is an internet connection to enjoy seamlessly. Additionally it provides games based on popular TV shows or movies as an additional engagement mode to its users. This offering reiterates Netflix's mission of entertaining the world.

 

Youtube on the other hand is a free to use user generated content video streaming platform where most of  its content is uploaded by creators on youtube. This creates a flywheel effect in which as more and more content is uploaded on youtube by creators, more viewers enjoy and engage with content encouraging creators to create more. Youtube earns its revenue through ads primarily and additionally sells subscription to users to enjoy an ad free experience. It also gives users to rent licensed content like movies. Youtube’s offerings aligns well with googles mission of organizing the worlds information at one place.

 

Approach : I will pick up a few axes to compare youtube and netflix and finally summarize my comparison.

 

Axes - Few axes which I want to pick is target users, content, user experience, business model where i can compare meaningfully.

 

axis

Netflix

Youtube

Target users

Content watchers or viewers who want to get entertained

Content creator, content viewer and advertiser

Content

To host Long form, licensed and professional content from creators like studios to entertain users

Supports both long form and short form content from creators of all strata.

Empower everyone to become a creator and share and monetize their content. Give viewers option to engage with the content of their favorite creators and discover new creators

Give businesses an option to promote themselves 

User experience

-Simple UI

-Not feature heavy and limited interactions 

-Limited content due to high licensing cost
-focus on niche content

-User preference heavy

-Feature heavy UI due to multiple video formats

-vast array of content

-mix of both user preference experience as well as new content discovery

Business model

Subscription based

Freemium + ads

 

 

Summary:

Netflix sacrifices breadth over quality of content and hence charges a premium.

 

Youtube sacrifices quality over quantity for greater scale and reach.

 

 

 

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Both Netflix and YouTube rely on subscribers to drive their views, but Netflix is a pay subscription that doesn’t have to rely on ad revenue to fund or monetize its original programming. This allows them to acquire original content and not worry about breaking up the story with ads. This doesn’t lend itself to taking the quick bathroom or water break, but it allows the user to have a more cinematic experience.

And it because Netflix releases an entire season all at once, it’s given birth to the trend of “binge watching,” where subscribers will watch an entire season all in one or two sittings.  Netflix also doesn’t have to worry about ratings as well since they can limit to regional releases.
By contrast, YouTube relys on views and subscriptions to drive the ad supported revenue of not only video inserts, but also the clicks and views that those ads require to justify their investment.  Google uses AdSense to drive the YouTube model, and it’s rather like broadcast for the net. The only difference, though, is that YouTube doesn’t have to cancel under performing channels, unless they’re putting money into them directly.  It also allows for niche programming and audience engagement through comments by viewers and subscribers.
Content Creators have the creative freedom to try new ideas, and to build their own audiences without the pressure of getting permission or worry about cancellation.  And the cream always rises, and that is where the money goes.  Creators cannot to solely rely on YouTube’s Adsense model for all their revenue.  Their approach must include everything from iTunes sales to product placement and affiliate links to merchandising.
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Areas you did well

1.        I think you have the foundation of a solid answer. You clearly know about both Netflix and Youtube.  I personally believe that most interview answers benefit from tighter structure.  Make it clear to the interviewer that you have a structure.

Area to think about.

1.       Describe the company or product – you do this – but I would do it very explicitly – make it easier for the interviewer

a.       Netflix is an online video distribution platform.  Netflix relies on monthly subscription for revenue .  Content on Netflix comes from professional studios and increasingly from unique content created or sponsored by Netflix.  One of the unique user behaviors of Netflix is binge watching an entire series. 

b.       Youtube is a video distribution platform.  YouTube relies on ad revenue with an upsell to an ad suppressed subscription model.  Content on YouTube is created by individual creators as opposed to studios.  The content is often shorter.  One of the unique user behaviors is extended watching of related content. 

2.       The question then asked how these differences differ from a product philosophy perspective. 

a.       Again I would be explicit for the interviewer

                                                               i.      Revenue

1.       When we look at the revenue models for the two companies Netflix needs to provide enough content to justify a monthly subscription therefore MAU and renewals is the most important metrics – Netflix doesn’t need you to log in every day – they just need you to renew.

2.       On the other hand much of YouTubes revenue comes from ads which means that DAU/MAU is more important, they need users to be on the platform flipping ads (time on site).

                                                             ii.      Content

1.       When we look at Netflix content – the quality of the content is what drives users to continue paying for the platform

2.       When we look at YouTube – the content is created by creators not studios – so the it much more important for YouTube to drive users into content genres – content recommendation becomes much more important

                                                           iii.      Etc.

3.       Summary – after a clear comparison make a clear summary

a.       From a philosophy standpoint – Netflix drives continued usage by brining great content to the user and enough content to get a renewal

b.       YouTube is less about the “the content” and more about the content recommendations

c.       This difference drives different platform behaviors… and different development needs.  – Describe what those are.

Hope this helps

 

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