The battle between long and short

From the outside, Netflix and TikTok may not look like competitors, but they are.

One is consumed on large screens, the other on small ones. One is long, the other short. One consumes billions of dollars in capital to create content, the other gets millions of hours of programming for virtually free. One is pay-gated, the other free and ad-supported.

“You’re really trying to catch eyeballs and the eyeballs can only be in so many places, right?” says Data.ai chief executive Ted Krantz.

It’s not just Netflix vs TikTok, of course. On the one hand, it’s all OTT and streaming, with Disney+ and HBO Max, Apple TV+ and Peacock, Hulu, Amazon Prime and dozens of others. And on the other hand, it’s Reels from Facebook/Meta, Shorts from YouTube, Trill, Likee, Snapchat and more. But despite its recent drop in must-have child status as our post-pandemic inflation era caught up with Netflix, it’s still the streaming giant with more customers than any other OTT service. And TikTok, which just had its most profitable quarter of all apps ever with $840 million in-app revenue, is now clearly the largest player in video/social/entertainment apps, despite the efforts of YouTube and Meta.

“The big silver screen just disappears, let alone the big plasma at home and your surround sound system, right?” That’s what Krantz told me on the TechFirst podcast recently. “Everyone, especially Gen Z, spends time on the mobile device consuming content.”

Next to gaming, OTT/streaming is the largest category in terms of consumer spending on mobile, Data.ai shares in a recent report. So programmed viewing isn’t going away completely, and Netflix and the company aren’t just for the big screen on the wall.

The challenge is that their business model – expensive content for paying customers – is much more capital intensive than TikTok or Meta or Snapchat, while building from a more limited collection than established players like Disney or HBO. Moving to an ad-supported model, which Netflix has committed to, will take time and effort, and could detract from the product that has brought them more than 220 million paying customers.

OTT still has three times the consumer spending, Data.ai says, compared to short video apps.

But that doesn’t apply to all segments, says Krantz.

“Gen Zo [is] they spend about three times as much on the short video as they do on OTT,” says Krantz. “That’s a really interesting trend… with that very loyal base, can TikTok move into other categories and then try to increase revenue more in line with the bigger subscriptions being played on OTT?”

In the end, the game is bigger and the pie bigger.

Because there’s another big category that also takes up time and revenue: gaming. And that expands into video, concerts and social categories.

“To make things even more complicated, here’s a third player,” says Krantz. “That’s the basics we’re not talking about today, and that’s gaming, which is still the biggest category. And they’re moving on to media and entertainment…so this is like a WWE game.”

That’s probably one of the reasons Netflix announced its expansion into gaming a year ago, which is available in 190 countries worldwide. And it is one of the causes of the merging of once separate categories in sometimes unpredictable and chaotic ways.

Who wins is ultimately determined by changing attitudes towards entertainment. What we do know is that people spend more time playing games and using their phones while watching fewer movies and TV shows. And that’s nothing new: it’s been trending for almost a decade.

While teens may not be watching the big screen, many spend a lot of time watching YouTuber in sometimes lengthy shows.

That’s exactly why the players seem to be converging: TikTok is allowing longer videos, YouTube is doubling up on Shorts, and Netflix is ​​looking at options for other ways to hold the attention. Not to mention Spotify feeding in videos with video podcasts, or Meta/Facebook trying to shift the whole conversation – and consumption model – to VR and AR in the metaverse.

The next decade will be interesting.

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