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Streaming Wars: Netflix Marketing Strategy Amidst Rising Competition

Streaming services like Netflix have transformed consumption and viewing habits. Now, 70% of consumers prefer subscription streaming over traditional TV (Spangler, 2022). The increasing adoption of streaming video subscriptions is fueled by consumer demand for original content, flexibility to watch whenever and wherever they want, and pay TV’s expanding value gap (Smith and Reese, 2022). Consumer appetite for video is insatiable, and so, the gap between what they expect and what pay TV delivers is widening.

The Switch From Subscription to Ads

Big players like Netflix and Disney+ are shifting to an advertising video on demand (AVOD) model as competition increases and consumers demand cheaper alternatives. Comcast’s research revealed that 80% of consumers prefer an ad-supported service when compared to a higher cost ad-free SVOD service (Bowler, 2022).

Netflix Recognized Competitors

In a Q2 2020 and Q4 2022 letter to shareholders, Netflix recognized Disney, Amazon. And even YouTube as competitors. Ted Sarandos reconfirmed this an interview:

I take all of them seriously. But I would say Disney and HBO eat, sleep, and breathe entertainment. That's what they do, it's what they live, and they have a 100-year history of doing that.

Why YouTube Made The List

According to Alexander (2020), while YouTube and Netflix serve different purposes, the competition for people’s attention among various streaming services ultimately determines who dominates the market. As Abusamra (2019) notes, YouTube’s success can be attributed to its mobile-centric service and short-form videos, as well as its efforts to launch different services and options to attract diverse users and generate revenue.

In terms of viewership, a Nielsen study (2021) showed that Netflix and YouTube each accounted for 6% of the 26% of time viewers spent on streaming services. This finding indicates that the battle for dominance in the streaming market lies between these two platforms. Furthermore, as Alexander (2020) points out, Netflix’s competitors are not just other content providers like Disney or Warner Media, but also platforms like Google, which owns YouTube.

Ad Strategy


Netflix is new to the ad space. Its ad-tier was launched in 12 countries in Q4 2022. the premium pricing for its new ad-tier may have been a strategic “soft launch” to work out kinks before making it available to a wider audience. Netflix offers tools to exclude broad genres but does not allow program-specific exclusion lists (Nguyen, 2021). Brands with heavy restrictions, e.g., alcohol makers, would be hesitant to invest in Netflix because of the limited guardrails.


Unlike Netflix, Disney maintained the same subscription costs for its ad-supported tier and increased prices for the ad-free experience (Heygate, 2022). This gave a clear incentive for users to watch ads. Nearly 1 In 4 subscribers switched to the cheaper ad-based tier (Hayes, 2022). This also gives it more advertising opportunities, including both linear and streaming buys. "Buys" refers to the process of purchasing ad space. Disney's ownership of various media properties, including Disney+ and ESPN, gives it an advantage over Netflix in the AVOD market. For example, it has the flexibility to move ad spending to different channels as consumer viewing habits shift. Furthermore, Disney’s family-friendly content makes it a safer investment option when advertisers consider brand safety.

Prime Video

Amazon Prime Video spends more on digital ads than Netflix, but releases major series less frequently (Katz, 2021). Advertisers can reach a wide audience on Amazon through presets or custom audience segments based on various factors (Hicklen, 2022). Amazon's shopping platform gives it access to more first-party data, allowing for improved targeting (McAllister, 2022).

Amazon displays non-intrusive ads, banner ads and content recommendations for Amazon products and original series. Prime video ads can be skipped and are muted by default but pause when the user scrolls past them (Miller, 2021). Advertisers can use Amazon's programmatic advertising platform or use Amazon's in-house creative team to create their ad content (Hein, 2022).


According to Perez (2017), YouTube Premium subscribers can turn off ads on YouTube Originals, download videos for offline viewing, and view videos in the background while using other apps. YouTube has recently expanded its shopping features in response to a slowdown in digital advertising (Reuters, 2022). The platform has introduced a new feature that allows eligible creators in the US to tag products from their own stores in their videos, as well as testing new commission schemes for influencers who sell products through video links. In addition, YouTube has introduced advertising on its Shorts feature, with video creators receiving 45% of the revenue (Reuters, 2022).

Content Strategy


Netflix's extensive content production requires significant spending. For example, the show “Stranger things” was funded and owned by Netflix, that cost nearly $8 million per episode, up front (Lee, 2019). Often this leads to a "negative free cash flow" where more money is spent than earned. But despite such aggressive spending, Netflix shows a profit on its books. This is due to an accounting rule that allows entertainments companies to record production and licensing costs a year or more later.

Netflix began producing original content in 2016 in anticipation of competitors no longer licensing their content to the platform. Original content offers benefits like first-window availability, global rights, perpetual availability on the platform, and copyright ownership (Netflix, 2022).


Despite being known for family-friendly content, Disney is expanding its content solutions for different age demographics, for example through Marvel (Barnes, 2021). The company now prioritizes growing loyal, quality subscribers (Benjamin, 2023). There is demand for more adult-focused content and integration with Hulu. A Whip Media survey reveals that over 63% of respondents would watch Disney+ more frequently with more adult content (Tran, 2021).

Prime Video

According to Hayes (2021), Amazon has struggled to compete with Netflix in terms of original content popularity and awards recognition. However, Amazon's video service cannot be considered a failure as it uses entertainment to attract customers to its ecosystem and market other products (the opposite of every other streaming platform). This unique approach allows Amazon to have seemingly unlimited resources and no real need to win right away. Churn at Amazon is almost nonexistent, which lowers the stakes for its employees (Shaw, 2022).


YouTube and Netflix differ in their approaches to subscription video content viewers. While both platforms license existing content from Hollywood studios, Netflix is more successful in producing original content (Goldberg, 2020). YouTube initially tried to create scripted original series but has since shifted its focus to backing ad-supported unscripted programming, reflecting its strength in user-generated content (Goldberg, 2020). This new strategy is aligned with YouTube's identity and emphasizes unfiltered and documentary-style content, moving away from big-budget productions (Strange, 2021).

Digital Strategy


Netflix intends to use cloud technology to launch its games on TVs. Thereby, expanding beyond just smartphones and tablets (Zhang, 2023). This would allow users to stream games over the internet without downloading them. Netflix could become a potential competitor to companies like Microsoft and Apple Arcade, with a wide range of titles.

Netflix made “The Dog & The Boy," a sci-fi anime short where the background art was generated using AI (Yeo, 2023). A human would draw a rough layout of what they wanted and feed it to the AI art generator. The processes would be repeated a few times. However, the company faced backlash when it credited the background designer as “AI (+Human)” and intended AI to ease labour shortage in Japan animation industry (Yeo, 2023). People contended that there wasn’t a labor shortage but rather companies unwilling to provide decent working conditions and respectable living wages (Margolis, 2019).


Disney developed a proprietary advertising-delivery system, Unified Ad Platform (UAP), based on the Disney Ad Server (DAS), delivering 500 million ad impressions per day on Hulu and Disney+ (Spangler, 2023). The UAP gives Disney greater control over the advertising-delivery process and supports proprietary ad formats such as Pause Ads and Binge Ads.

In contrast, Netflix has partnered with Microsoft to run ads off the Xandr platform acquired from AT&T. Disney also uses YODA, an algorithmic engine that facilitates automated competition between direct-sold and programmatic ad buys, and DRAX, a tool that helps Disney manage its advertising inventory more efficiently by hosting internal auctions (Spangler, 2023).

Prime Video

In the past few years, Prime Video's group has been utilizing machine learning to identify issues in captured content from various devices to ensure high-quality streaming experiences. This technology is now being applied to real-time quality monitoring and analyzing new content at scale (Ihsan, 2022). The team trains computer vision models to detect problems like blocky frames and audio noise, allowing them to analyze hundreds of thousands of live events and catalog items (Kumar, 2022).


YouTube today introduced a series of new tools for marketers, like “Director Mix,” a technology that allows a company to create thousands of video ads tailored for different audiences all using a single creative asset (Adwords, 2017). That is, the advertiser could upload a number of different voiceovers, backgrounds, and copy, and the system automatically creates different versions of the video ad to match the advertiser’s various audience segments they are targeting.

Pricing Strategy


Netflix's recent price increase has made its standard plan more expensive than HBO Max, which could potentially increase customer churn and harm Netflix's growth, particularly in the US and Canada where competition is high (Sherman, 2022). Morning Consults (2022) survey found that the ideal price point for ad-free streaming platforms offering unlimited access to their content libraries is $12 per month, while $10 per month is the ideal cost for an ad-supported service. Despite being the most expensive among major platforms, Netflix has the most original content (Loria, 2021).


Disney raised its monthly subscription fees and introduced an ad-supported tier for Disney+. The company's CEO, Bob Chapek, believes that reducing costs and implementing price increases and an ad-supported tier will help achieve profitability (James, 2022). Christine McCarthy (CFO) signaled a reduction in content and marketing expenses to rationalize costs (James, 2022). Disney aims to save $3 billion in content costs over the next few years by curating its general entertainment content better in terms of costs and volume, with a new strategy of licensing content to achieve cost-savings (Huston, 2023).

Prime Video

Despite a recent price hike, Amazon Prime has become the largest and most lucrative subscription model, offering services such as Free Shipping, Prime Video, Prime Reading, Prime Music, and gaming (Sarkar, 2021). Prime members spend more than non-members and their behavior and shopping patterns are tracked to predict revenue streams (Sarkar, 2021).

Amazon's hybrid revenue model combines subscription-based (SVOD) and transactional video on demand models (TVOD). Amazon Prime Video offers tons of content within the SVOD package, with additional TVOD purchases available and the ability to subscribe to other SVOD services within the same app (Yeates, 2022). Amazon Prime delivers a service worth $1,000 for a $139 annual fee (JPMorgan, 2021).

What's Next For Netflix Marketing Strategy?

What is Netflix’s take on the competitive landscape? In a 2022 letter to shareholders, it surmised that competitors are beginning to focus more on profitability by raising prices, reducing content spending, and adopting traditional operating models. Meanwhile, Netflix believes that its focus as a pure-play streaming business gives them an advantage. However, Warner Bros CEO, David Zaslav felt differently:

The strategy to collapse all windows, starve linear [television] and theatrical [box office] and spend money with abandon, while making a fraction in return, all in the service of growing sub numbers, has ultimately proven, in our view, to be deeply flawed. (Faughnder, 2022).

One thing is for sure, with shifting trends in consumer consumption habits, Netflix’s scope of competitors has increased to anything on a screen. To stay atop competition, Netflix marketing strategy must plan ahead and play its cards right.

References (click to expand)

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