News & Events / February 19, 2021

Cobra Kai and Its Big Move to Netflix

Cobra Kai and Its Big Move to Netflix

Netflix released the third season of “Cobra Kai” last month, and it quickly became one of the streaming service’s biggest shows. A sequel series to the popular “Karate Kid” movies of the 1980s, “Cobra Kai” attracted many fans with its combination of action, comedy and nostalgia.

As an MBA with an interest in marketing, I've been watching the story, and the story behind the story.

However, the hit show wasn’t always the success it is today. “Cobra Kai'' didn't actually begin as a Netflix series – it started as a YouTube Red (later rebranded as YouTube Premium) original series. But few people were watching. The show spent its first two seasons in relative obscurity.

In fact, to many, “Cobra Kai” seemed to have simply appeared in 2020 with two seasons already produced and released. Why was that? If the show itself didn’t change, then why did it draw such a large fanbase as a Netflix show when it couldn’t draw views as a YouTube exclusive?

The answer may offer some insights into branding and marketing strategy.

Netflix has over 200 million subscribers and is practically synonymous with streaming. YouTube may have billions of active users but its paying YouTube Premium subscriber base is much smaller, roughly one-tenth of that Netflix total.

“Cobra Kai” was actually a fairly large hit for YouTube Premium, being by far its most popular scripted show. If you look at the first episode, which is still up on YouTube, you can see the video has over 100 million views.

Why then did YouTube choose to cancel its most popular series to give to Netflix? The answer lies in the type of content that each service chooses to pursue. People don’t go to YouTube for scripted television shows but rather for short clips and YouTube personalities such as Pewdiepie, one of the service’s most popular streamers. It’s this thinking that led YouTube to cancel most of its scripted shows in favor of promoting its traditional creators.

The question that YouTube has to ask is: why do people sign up for its service? YouTube does offer some exclusive content for its paid subscription service but if you look at the marketing around YouTube Premium, the primary feature is the removal of ads on traditional YouTube videos. So while subscribers may have enjoyed “Cobra Kai,” the show wasn’t necessarily a large reason for someone to subscribe to the service.

You can see this from the numbers of that first episode that YouTube uploaded. That first episode was released on its normal YouTube service for free, available to anyone who wanted to see it, and subsequent episodes were behind the YouTube Premium paywall.

While YouTube premium videos do not share viewership data, that first episode has many times more views than the total number of YouTube Premium members, meaning that if every single YouTube Premium member watched the show (which is unlikely) the following episodes would have sharply fallen in viewership.

Netflix on the other hand is known for scripted television shows and has had success tapping into ’80s nostalgia with shows such as “Stranger Things.” A show like “Cobra Kai” is more “on brand” as a Netflix special than it ever was as a YouTube exclusive. Hence, we get the sale to Netflix where the show excelled with the Netflix audience.

Since Netflix’s business model is selling subscriptions to people who want to watch shows like “Cobra Kai,'' it likely had a much stronger impact on moving subscriptions for Netflix’s service than it ever would have for YouTube.

–By Braden Walden. Walden is a current MBA candidate set to graduate in 2021. Originally from Chicago, he has lived in New York, Seoul, Washington, D.C., and Baltimore. Following graduation, Walden is set to start a new career at Navy Federal Credit Union.

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About the University of Maryland's Robert H. Smith School of Business

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty master's, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

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