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Message from Adam Grant + The fundamental difference between YouTube and Netflix
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Message from Adam Grant + The fundamental difference between YouTube and Netflix

What it means for the future of the internet

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Network Capital
Sep 02, 2022
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Message from Adam Grant + The fundamental difference between YouTube and Netflix
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Idea in brief: Both YouTube and Netflix are content companies that make similar revenues. One is centralized, the other is open source. One lies on the creativity of celebrities, other creates micro-celebrities at scale. One spends a bomb acquiring/producing content, the other gets it for free.


Netflix was founded in 1997. Last year, it did $30 billion in revenue, +18% year-over-year. In 2013, the year House of Cards was produced, Netflix had 40 million users and spent more than $2.0 Billion on content. As of last year, it had accumulated 225 million users and spent $19 billion on content. In other words, its user growth increased 5X over 8 years whereas its cost of content almost 10Xd.

**If you are interested in learning more about how Netflix hyperscaled in the early days, we recommend listening to this Network Capital podcast by INSEAD Professor Erin Meyer who wrote “No Rules Rules” along with Netflix CEO Reed Hastings.

Listen to Podcast

YouTube was founded in 2005. It also did $30 billion in revenue last year, +46% year-over-year, and has 2.6 billion users—but unlike Netflix, YouTube didn’t spend any money making that content. All of us created / consumed that content for free.

YouTube pays creators 55% of advertising revenue, which is effectively its cost of content. To understand how YouTube economics works out, check out our analysis on Cambridge doctor turned YouTube millionaire Ali Abdaal.

Network Capital
Ali Abdaal: Cambridge Doctor Turned YouTube Millionaire Turned EdTech Tinkerer
When a Cambridge educated doctor quits his job to create YouTube videos, it raises eyebrows. Some call it inspiring while others call it bizarre. Ali Abdaal is the son of an immigrant single mother living in UK. Early on in his life he realized the importance of passive income. He learned to code in school and worked on a wide range of projects with di…
Read more
4 years ago · Networkcapital.tv

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