What would be a compelling differentiator from what YouTube offers?

Better customer service and content management? YouTube's system for handling copyright claims is a huge mess and they don't have much incentive to fix it without a serious competitor. They've burned a lot of creators and some people would jump ship if there was a fairer alternative.

Netflix could also leverage the same strategy Hulu or the Epic Store has... pay/incentivize creators and partners for exclusivity. I hate this strategy as a consumer, but it does seem to be effective.

Higher-brow comments?

Not incentivizing propoganda directed at children?

There aren't many YouTube competitors because the upfront investment is high. And building a userbase from zero is hard.

Netflix already has most of what's needed in terms of infrastructure and talent.

It wouldn't need to beat YouTube. It could also offer something like what Vimeo does.

Edit: I wonder if buying Roku would be a good move. Their competitors all have players.

It seems lately that there's been a lot of hate for YouTube, with it's demonetizations and copy right strikes.

I can see them basically poaching top YouTube talent and telling them, we'll pay for your show, just it has to be on our platform.

Netflix would need completely new discovery mechanisms if they wanted to give YouTube level content any form of visibility without throwing the perceived overall quality of their offerings under the bus.

And YouTube has this weird moat: people know and accept that almost everything YouTube offers is crazily bad clickbait, but this is what enables the exotic gems. People just know to focus on the good parts and not hold the rest against the platform. YouTube only got there through a combination of boiling frog effect and an extremely forgiving audience back when the novelty factor of streaming video dominated their perception. Any new competitor would be instantly burned for even just 10% of the crap ratio that nobody is even noticing on YouTube.