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As Hollywood strikes, a golden opportunity to win over Gen Z viewers is staring streaming services right in the face
“The Night Agent” is one of Netflix’s most popular shows. It costs the streamer about US$2-3m per episode to produce, which is actually pretty affordable. “The Crown,” by comparison, is thought to cost around US$13m per episode.
“AND NO ONE BORN BEFORE 1981 CONSUMES HOME ENTERTAINMENT?”
There’s a generational divide when it comes to entertainment viewing habits.
Millennials prefer streaming TV, but 61% of Gen Zers prefer watching user generated content.
Some think that this sounds like a brewing headache for streamers like Netflix and Max.
I think it sounds like a lifeline.
Zoom out: as this newsletter has written, streaming is a horrible business.
The reason: The Night Agent, Queen Charlotte: A Bridgerton Story and Wednesday are expensive to make and market. What’s more, Netflix users —when they’re not sharing passwords with non-users— are totally able to cancel their subscriptions when they’re done watching binging their favorite shows.
(I’ve done this myself with two other streamers this Summer. I didn’t think twice about cancelling either subscription, and I also haven’t missed either streamer at all.)
DUDE, WE KNOW
Netflix knows all this, obviously, which is why —in addition to spending billions on content— they have also consistently innovated over the years, inventing now-commonplace tactics to make their product stickier, like auto playing the next episode, or serving you a different thumbnail/preview clip for a series or movie, depending on what else you’ve watched.
But it isn’t enough.
While $NFLX is up an impressive 48% this year, the sector isn’t faring well:
Earlier this year, Disney+ reported a 4Q22 subscriber loss of 2.4m people, and plans to lay off 7,000 employees across the entire company.
They followed that up with a loss of 4m subs in the first quarter of this year.
Last year, HBO Max (now simply called Max) started pulling HBO shows like Westworld off of its platform —to save on licensing fees.
And all of this was before Hollywood’s writers and actors went on strike, a move that some observers think might backfire. Here’s business school professor, entrepreneur, and media personality Scott Galloway, aka Prof G:
That last part touches on my thesis: I think Gen Z’s preference for UGC, coupled with the Hollywood strike represents an historic opportunity for streamers to build out an entire new library of content.
REMINDER: UGC IS FREE
Once again, for those in the back: USER GENERATED CONTENT IS FREE.
And, as Prof G puts it, “filmed entertainment is ruinously expensive.” How expensive?
Netflix’s co-CEO said the company will likely spend roughly US$17b on content in 2024. Same as what they spent in 2023.
TikTok, of course, spends nothing.
Netflix knows. They’ve long recognized the threat that likeable, snackable content poses.
It’s why they pushed out a half hearted, short-clips-only channel showing snippets of shows. Netflix called it Fast Laughs. The laughs weren’t the only thing that was fast. So was its tenure.
They canned the experiment earlier this year. They did the same thing with a “shuffle” feature called “Play me Something”. The effort, later rebranded “Surprise Me,” was supposed to to help users find new content. Instead, it was quietly removed due to low usage.
AN OBVIOUS ANSWER?
Netflix! Don’t reinvent the wheel. Just remake trending TikToks and Reels.
Seriously. Just pay good creators to remake their greatest hits, for Netflix.
Really: Reach out to the creators you like. Despite the Hollywood strike, many will at least take your call.
This tactic not as random as it sounds. As the excellent social media newsletter Link in Bio first reported, the clothing brand Reformation employed influencers to simply re-film their most popular TikToks as Instagram Reels, only this time wearing Reformation.
It worked. Unsurprisingly. As Link in Bio put it, “the content is also almost guaranteed to perform since the original version was already proven on a different channel.“
Absolutely nothing is stopping Netflix from doing exactly the same thing, remaking clips from independent creators that have been proven popular, and serving them up to a global audience.
OK, WHAT’S THE POINT HERE?
Netflix has the infrastructure, the user base, the data, the cash, the internal engineering and marketing talent, and now —with the Hollywood writers and actors strike— the opportunity to create a fresh platform for User Generated Content.
Gen Z knows: the future of mass media is bite size, low budget —and free for the platforms that disseminate it.
Give the kids what they want, for goodness sakes.
Reformation has quietly been asking TikTokers to remake their viral videos while wearing the brand's clothes »» (from April 2023)
Record decline: Why Disney+ lost another 4m subscribers »» (from May 2023)
I polled my LinkedIn audience about their first choices for home entertainment, and the results surprised me »»
Written by Jon Kallus. Any feedback? Simply reply.