Hulu and YouTube are great case studies in why having a clear strategy matters. They are an even more interesting example because they chose opposite strategies. Despite both being streaming platforms, they chose strategies that fit their unique needs and constraints.
In the early days of Hulu you were likely to discover that more shows were unavailable than were. Leadership decided that in the case of Hulu they would pursue a strategy of comprehensiveness. If a customer searched for a show they wanted to ensure that they returned a result. In the product this meant that if you searched for a show they didn’t have they would tell you where you could find it. And they would even link you out to the show. Say you searched for Parking Wars (I was into Philadelphia civic policy in 2011), you would likely find that it wasn't on Hulu. But they would tell you that you could find it on A&E and give you a link to go watch it. They wanted to make sure you saw the content you wanted even if they couldn't show it to you.
YouTube took a strategy that was counter to comprehensiveness. Their product strategy revolved around continuity. They wanted to ensure that the product experience was consistent, which meant keeping customers on YouTube. The trade off they made was that they did not always return results for every request made by users (this was before everything was on YouTube.). If you searched for something on YouTube, say Storage Wars, and they didn’t have any videos you would see a screen informing you of that fact. Sometimes it would recommend related content. Other times it would tell you to search for something else. One thing it would never do was tell you that you could go watch Storage Wars on A&E. (Apparently I watched a lot of A&E back then, if I am honest I still do catch the occasional Dog The Bounty Hunter rerun on that fine network).
So how did two video streaming services take completely different product strategies and find success? They chose strategies that made sense to their offering and market.
Hulu relied on licensed content. They knew that it would take them years of negotiating to fill out an expansive content offering. Instead of making customers wait, they chose a strategy that ensured customers would always find what they wanted, even if it wasn’t yet on Hulu. This was risky because they couldn’t control the customer experience once users left Hulu. They also couldn’t guarantee that users would come back. But this strategy also had a few positive knock-on effects. They built relationships with other content providers as part of their referral strategy. And they were able to collect customer search data. This data revealed what popular content they were missing, which helped to guide their content acquisition strategy.
YouTube instead relied on crowd sourced content as the basis of their app. This directly shaped their strategy. They assumed that as more and more users joined the platform, more and more content would come with them. A search that today had no results would soon have 100’s of results. So rather than send customers outside of YouTube they built a product that kept them there. This also came with risks, if a user ran into too many empty searches they might get frustrated and never come back. The bet was that the broad audience (basically everyone on earth) and the ability to add content quickly would mean user acquisition would far outpace churn.
Comprehensiveness vs Continuity, just one example of how differing product strategies can be deployed successfully. Would love to hear if you have other examples.
