Lessons from Netflix and Hulu for TikTok LIVE

The recent evolution of TikTok LIVE, which is almost entirely viewer-funded, showcases the power of a business model centered around direct audience engagement. TikTok's explosive growth, particularly in the live-streaming sector, comes from viewers supporting creators through virtual gifts, donations, and direct interactions, with no advertising yet influencing the content. This aligns with the viewer-funded model seen in Netflix's early days, where the platform was focused on content quality and viewer satisfaction.

Viewer-Funded Models Drive Authenticity and Growth

Just as Netflix, for its first 15 years, was driven by subscriptions with no ads, TikTok LIVE has thrived on direct viewer contributions, creating a vibrant and authentic ecosystem. Viewers support creators they connect with, and creators have the freedom to experiment with content, fostering genuine engagement. This viewer-driven economy allows TikTok LIVE to grow while maintaining a high level of authenticity.

TikTok’s live streamers are not beholden to brand requirements or advertiser demands, allowing for more personalized and interactive content, which fuels deeper community engagement. This viewer-focused approach has driven the platform’s success, much like Netflix’s early focus on audience satisfaction before introducing advertisements.

The Risk of Introducing Advertising Too Early

However, introducing brand-funded or ad-supported content too early could be detrimental to TikTok LIVE’s unique ecosystem. If ads or branded content are rushed in, the focus could shift from the viewer to the advertiser, as was observed with Hulu, where ad-supported content often compromised the platform’s ability to create shows that were viewed as experimental, but drove significant revenue. ​(The Strategy Story)​(Motion Picture Institute).

Netflix, in contrast, took nearly 15 years to introduce its ad-supported tier, focusing first on establishing strong audience loyalty and producing high-quality, engaging content before allowing advertisers to influence the platform. This delayed introduction of ads allowed Netflix to build a vast, loyal subscriber base before any dilution of the viewer experience occurred​(Product Placement).

Other platforms like YouTube and Twitch have shown that introducing ads too early or too aggressively can lead to viewer frustration, content commodification, and in many cases, lower engagement. These shifts prioritize brand interests over the needs of the audience, which can weaken the connection between creators or performers and their communities.

Hidden Benefits

A slightly opaque benefit of TikTok LIVE’s model is the minimal upfront investment in content creation, unlike platforms like Netflix and Hulu, which rely on large budgets and lengthy production cycles to fund high-cost shows. Live streaming allows creators to engage audiences instantly, adapting content in real-time without major financial backing. This low-cost, high-creativity model drives innovation while minimizing risk. If even a small portion of traditional streaming budgets were invested in supporting planning, scripting, and creator support for live streams, TikTok LIVE could amplify content quality while keeping the focus on viewer satisfaction. This approach would yield a double benefit: better content and continued platform growth without compromising its unique, low-risk model.

Conclusion: Building TikTok LIVE’s Ecosystem

While there’s no doubt that a brand and ad-supported model can generate short-term revenue, the viewer-funded ecosystem TikTok LIVE has cultivated needs protection and nurturing to ensure it matures into a truly viable LIVE entertainment platform.  Taking focus away from content too soon can erode the trust and connection creators have built with their audiences. Netflix’s 15-year delay in adding advertisements is a valuable example of how careful timing and prioritizing the viewer experience first leads to long-term success.

The success of TikTok LIVE isn’t just built on its viewer-funded model, but also on the time and resources that creators dedicate to producing exceptional live content. This aspect is essential to fostering the vibrant, engaging community that has made TikTok LIVE flourish. Creators focus on understanding their audience’s needs, producing content that resonates with viewers, and building authentic relationships—all of which require significant creative effort.

A key point often overlooked in the rush to monetize is that the creative process—developing content that provides a memorable viewer experience —requires time, attention, and experimentation. The intangible nature of this work sometimes makes it seem less immediately rewarding compared to securing a sponsor, but it is this creative investment that sustains long-term success. As seen with Netflix, their greatest successes stemmed from prioritizing viewer satisfaction over short-term gains through brand and ad funding. We are in a unique position in the history of entertainment with TikTok LIVE, because viewer funded entertainment was the starting point, and it’s easier to continue on the path rather than return to it once it’s too late. 

In conclusion, TikTok LIVE’s current model is a winning strategy, and rushing into an ad and brand-supported environment could damage the authentic, viewer-centric engagement that has made it so successful. By focusing on the long-term benefits of a viewer-funded ecosystem, TikTok can ensure sustained growth and avoid the pitfalls that come with prioritizing brand interests too early. by Ben Baldwin: Creative Director, blu shift creative