YouTube Crane Kicks Into the Streaming Wars With ‘Karate Kid’ Sequel

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(Bloomberg) -- What a great time to be a grown-up ‘80s kid. Our comic books are the prevalent cultural narrative; there’s a friggin’ Han Solo movie coming out in a week, another Bill & Ted in development and excellent new installments of Star Trek and Lost in Space streaming online.

Best of all, I am here to urgently inform you, are the 10 half-hour episodes of Cobra Kai, a sequel to the old Karate Kid films, now available to watch on YouTube. They star Daniel-san (Ralph Macchio) and Johnny Lawrence (William Zabka) from the original 1984 classic, and combine earnest nostalgia with self-effacing comedy, placing the story within the modern conversation around cyber-bullying and gender stereotyping. I watched the whole thing in two sittings with a smile on my face, resisting the temptation to impress the kids and risk my back with a crane kick.

Cobra Kai airs on something called YouTube Red, a two-year-old effort by Google’s streaming division to capture a piece of the ever-growing online subscription pie. For $10 a month, subscribers get access to original shows, unlimited music and an ad-free version of the site. While Cobra Kai is a well-deserved hit, with a perfect score on Rotten Tomatoes, YouTube still has a ton of work to do to lodge the service on our monthly credit card statements, alongside charges from competitors like Amazon Prime, Hulu and Netflix.

First, though, kudos to YouTube for placing a bet on Cobra Kai. The producers, makers of the Hot Tub Time Machine movies, reportedly pitched the show widely. YouTube outbid the likes of Netflix Inc., Amazon.com Inc., Hulu LLC and AMC, partly on the basis of its own internal data, which showed millions of views and thousands of comments for clips of the goofy, original films. (One of the delights of the new show is how it weaves the obsessive online debate about the movies into the plot, such as whether Daniel’s climactic kick in the finale of the original was even legal.) Susanne Daniels, global head of original programming at YouTube, says of the series, “We knew it was something viewers continued to be excited about.”

But here are the problems with Google’s strategy. YouTube Red got its start working with streaming stars like Logan Paul, Joey Graceffa and Liza Koshy. Much of Cobra Kai’s core audience, with their vintage leather jackets in the closet, probably wouldn’t even recognize those names. (Maybe Logan Paul, after Youtube pulled ads from his tasteless videos.) Daniels says YouTube Red’s audience skews younger than other streaming services, “a result of having an initial strategy of appealing to our heavy users” and that Cobra Kai is part of an effort to expand that base.

To that end, the service has been green-lighting other more mainstream fare, like Impulse, an extension of the 2008 teleportation movie Jumper, and Daniels says more is coming. But until it gets there, viewers will be tempted to cancel YouTube Red after bingeing Cobra Kai.

YouTube also offers something called YouTube TV, a so-called “skinny bundle” that’s meant to replace your cable box with online access to 50 networks, including ESPN, CNN and FX. It costs $40 a month. That’s typical Google: Presenting to its customers dueling services with different approaches. (Another music streaming service is also coming soon.) Daniels concedes the company needs to clear things up: “I do think it’s confusing. I don’t know what to tell you. The burden is on us to make our offerings clear.”

If it wants to solve these problems and expand its pantheon of hits beyond Cobra Kai, YouTube will also have to step up its spending on original content. We’ve reported that its spending on original shows is currently flat. Meanwhile, Netflix will spend $8 billion this year; Amazon and Hulu are right behind it. Daniels jokes about this: “If I had a dime for every time someone said to me, ‘Don’t you have Google money?’ I’d be able to buy whatever I want.” For now, though, she clearly doesn’t. “I’m trying to make the best of what I got,” she says. At least Cobra Kai is a pretty good start.

This article also ran in Bloomberg Technology’s Fully Charged newsletter. Sign up here.

And here’s what you need to know in global technology news

Trump reversed course on ZTE. A few weeks after cutting off the Chinese telco from U.S. suppliers, the president tweeted that he’s working with Beijing to help the company.

Cybersecurity company Symantec is conducting an internal investigation, with a focus on its financial accounting. With details scant, Wall Street is fearing the worst.

Two more Tesla executives stepped away. Doug Field, the automaker's engineering chief, said he’s taking time off to recharge, while its regulatory point person defected to Waymo.

Masa and the “mind-boggling futuristic scenario.” The Economist took a deep look at SoftBank’s Masayoshi Son and his high-stakes Vision Fund.

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