Marketing Mix: Netflix vs. YouTube (4 P's)
Entertainment is one of the most profitable industries in the United States (and probably the rest of the world), this is especially true since the Covid-19 pandemic started and basically everyone is at home working remotely now (Duffin 2020). Sure enough, there are plenty of platforms and channels dedicated to providing shows to the people. Two of the most successful platforms that provide entertainment are Netflix and Youtube.
Netflix’s Marketing Mix
Netflix is an online video streaming company that was founded in 1997 as an online DVD rental firm (Pafitis 2020). They made the switch to video streaming in 2007 and today Netflix enjoys a subscriber base of almost 200 million people in 190 countries (Pratap 2020). How did they become so successful? Let’s take a look at their marketing mix.
Netflix is not just another video streaming platform. What makes them different and way more successful than their competitors is what they stream. Besides very popular TV shows like Friends, and movies such as the Harry Potter films and The Lord of The Rings trilogy, their strength lies in the massive emphasis on producing original content. Shows such as Tiger King, Stranger Things, and Black Mirror for example are Netflix Originals that entertained its subscribers and attracted millions of new ones (Pratap 2 2020).
Another massive pillar of Netflix’s success is its low pricing. Netflix uses the penetration pricing technique, which allows subscription for a low price and then slowly raises the price (brex.com 2020). It provides three packages to choose from that are to be paid on a monthly basis. Each package includes the same thousands of original and licensed movies, documentaries, and TV shows, the only difference is the picture quality and the number of devices that content can be streamed on from one account (Pratap 2 2020). Prices range from $8.99/month for the Basic package, which includes Standard Definition and one screen to watch movies on; $13.99 for the Standard package, which is available in HD and allows movies to be watched on two screens; and $17.99 for the Premium package, which allows 4 screens and is an Ultra HD streaming (Netflix n.d.).
Netflix’s streaming services are available online on its webpage for desktops and laptops, and via the Netflix app for tablets and smartphones. Having and online presence makes it easily accessible for anyone from anywhere in the world, as long as they have fast internet connection. However, the content can be downloaded to a device and can be watched in offline mode as well when there is no internet connection available.
The original content is what really promotes Netflix through word of mouth marketing. The shows are so good that people talk about them on social media and with their friends and family (Pratap 2 2020). Netflix also spends resources on developing excellent customer experience with the help of data tracking and analysis and an advanced algorithm that analyses a customer’s every action on the platform in order to provide a very personalised experience (Haughey n.d.). Another very successful way of promotion in their social media presence. What they do is, basically they post funny and relatable memes about their shows that engage followers, start discussions, and make them share those posts. For example, everybody has heard of the term “Netflix and chill” (Siddiqi 2019).
(Photo: Screenshot From Grande Electro Facebook Page)
YouTube’s Marketing Mix
A huge competitor of Netflix, and another video streaming giant is the popular YouTube, which was developed in 2005 by three guys, and it was sold to Google in 2006 for a whopping $1.65 billion (Sorkin and Peters 2006).
YouTube is also a video streaming company, but it is a little bit different from Netflix. Here, the emphasis is on original content as well, but instead of the company itself spending billions directly on the creation of the content, it partners up with regular people who are called “content creators”, who make videos about literally every topic on Earth and upload it on the platform. These people are usually professionals, who make their living off of these videos, but anyone can upload videos on YouTube. According to David (2020) around 500 hours of new content is uploaded to YouTube every minute. Besides the regular YouTube, there are several subcategories provided, such as YouTube Kids, YouTube Music, YouTube Originals, YouTube TV, and others (David 2020).
Regular YouTube is free to watch, however, videos include advertisements at the beginning, the end, and sometimes in the middle of a video a few times. The content creators get what is called an “ad revenue” from people watching these ads. The creators’ share is around 55% from the ad revenue, the average cost of ads being around $7.60/100 views (Bhasin 2019). But there are paid-for services as well, such as YouTube Originals, YouTube Music, the ad-free YouTube, YouTube TV, and so on. YouTube TV is a TV channels streaming service that includes 85 popular TV channels with unlimited recording options, all for $64.99/month (David 2020). Movies can be purchased or rented as well.
YouTube is an online platform that can be accessed from almost any country in the world through the website on desktop and the app on mobile devices. It is estimated by YouTube that 70% of its traffic comes from mobile devices. The service, however, is banned in certain countries, such as China and North Korea (David 2020).
YouTube has become the largest video sharing platform with millions of people using it every minute (David 2020). It created strong partnerships with content creators, as well as music video making agencies, so a large portion of the videos are of really high quality (Bhasin 2019). This, coupled with the fact that a huge amount of people share YouTube videos on social media and amongst each other, makes for the fact that YouTube does not really need to make promotional efforts. Although there are many other video sharing websites available, YouTube is by far the largest one and is in a monopoly situation.
Similarities and Differences in the Marketing Mix
The marketing mix between Netflix and YouTube is very much different in every aspect. They both are in the same industry, but the products are different, the pricing is different, and the promotion is also different. The only similarities are that both offer original content and both are online services.
Netflix is a paid-for service that has a separate Kids category. This makes it possible for them to stream movies and TV shows that are rated R and 16+. It is pretty common amongst Netflix movies to contain foul language, gore, nudity, violence, etc. On the contrary, YouTube makes huge efforts to keep its platform a safe and politically correct place, because it is a free service and anyone can see any video. The way they fight against unacceptable content is through the reporting or flagging option. This way they can “de-monetise” a video (which means the creator will not get ad revenue from that video), and sometimes they go as far as banning a creator from the platform and deleting every video from them if they heavily break the rules (David 2020). These actions keep creators from posting inadequate content.
In conclusion, two companies from the same industry can be both giants in their own way, without having to spend ridiculous amounts of money on marketing. It only depends on the quality of the products and services provided and how the customers perceive that product/service. Netflix and YouTube are great examples of how entertainment can be so different and can cater to different groups of people. They both offer great content and (the numbers don’t lie) the world needs both of them.
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Pafitis, E. (2020, August 11). Netflix's marketing strategy: What can we learn? https://www.startingbusiness.com/blog/marketing-strategy-netflix
Pratap, A. (2020, October 24). Business growth strategy of Netflix: A case study. https://notesmatic.com/2020/10/business-growth-strategy-of-netflix-a-case-study/
Pratap, A. (2020, April 10). Marketing mix of Netflix: 7 Ps. https://notesmatic.com/2020/04/marketing-mix-of-netflix-7-ps/
Undefined. (2020, March 20). Brex Log: Using a penetration pricing strategy: Overview and examples. https://www.brex.com/blog/penetration-pricing-strategy/
Netflix, Inc. (n.d.). Plans and Pricing. Retrieved January, 2020. https://help.netflix.com/hu/node/24926/us
Haughey, C. (2020, December 10). How Netflix is winning at modern marketing. https://www.engagebay.com/blog/modern-marketing-tips-netflix/
Siddiqi, M. (2019, June 26). The complete guide to Netflix's marketing strategies. https://medium.com/better-marketing/netflix-marketing-strategies-8c6623fb1741
Sorkin, A., & Peters, J. (2006, October 09). Google to acquire YouTube for $1.65 billion. https://www.nytimes.com/2006/10/09/business/09cnd-deal.html
David, J. (2020, October 06). Marketing mix of YouTube (7Ps of YouTube). https://howandwhat.net/marketing-mix-youtube/
Bhasin, H. (2019, April 26). Marketing mix of YouTube. https://www.marketing91.com/marketing-mix-youtube/