YouTube is using a carrot-and-stick approach to keep top creators from cozying up to Netflix

Streaming has always been a two-horse race between YouTube and Netflix, and for the most part, they stayed out of each other’s lane. While YouTube built its business around creators and ad revenue, Netflix focused on paying for professionally produced content.

That truce appears to be over. Netflix has spent the past year going after YouTube’s biggest stars with big checks, and now YouTube is fighting back in kind, with even bigger checks of its own.

What is YouTube offering creators?

According to a Bloomberg report, YouTube is dangling millions of dollars in front of popular creators if they agree to keep their videos exclusive to the platform for a set period. The offer comes in two forms. 

YouTube is willing to directly fund certain shows, and it’s also offering creators a cut of major brand deals it lands. None of these deals are locked in yet, but sources close to the talks say YouTube is nearing agreements with a handful of partners.

That’s the carrot part; here’s where the stick comes in. The company has warned creators that cross-posting to Netflix hurts their YouTube viewership and signals that YouTube is no longer their main home. If creators sign with Netflix, they could lose out on YouTube’s marketing pushes, event invites, and cut of brand campaign money.

Why is Netflix suddenly a problem for YouTube?

Netflix has been signing creators like Alan Chikin Chow and Nick DiGiovanni to post the same videos on both platforms at once, and it’s reportedly in talks with dozens more, including the popular talk show Hot Ones. 

With over 325 million subscribers, Netflix hands creators a massive new audience on top of a fat paycheck for content they were already making. It’s an easy sell.

And the two platforms are no longer strangers to each other’s turf either. YouTube now grabs more TV screen time than any other streaming service, while Netflix has started licensing YouTube-native hits like CoComelon to hook younger viewers.

YouTube probably sees Netflix as an encroacher, poaching the very talent the platform helped create. For now, the two are locked in a tug-of-war over the same pool of creators, and the creators are the ones cashing in.