Why ‘Cobra Kai’s’ move to Netflix is the perfect sequel
Updated: Feb 11
Red and black never looked so good.
“People will be talking about that last kick for years!” -Tournament Announcer (The Karate Kid Part II)
One of my favorite aspects of the original Karate Kid sequels is how they open with flashbacks to the prior installments. It’s a tried and true storytelling device that pays homage to the serialized films of yesteryear. It would remind fans of highlights from the prior chapter while giving new audiences a brief primer to catch them up to speed.
So, in honor of the first two Karate Kid sequels, here is a callback to an article I wrote in May 2018, following the release of the first season of Cobra Kai.
“But instead, YouTube Red is allowing consumers to try its service for 30 days, binge all 10 episodes, and cancel with no strings attached. They know that people are going to share this tidbit when talking about ‘Cobra Kai.’ They’ve even included this information in all of their own marketing.
I believe they are playing a long game.
‘Cobra Kai’ is their first step to becoming a real player as a subscription platform. Because of its success, millions of people now know what YouTube Red is. It has become part of a larger conversation. But as great as the show is, it’s probably not enough to justify a long-term subscription …
You can read the full article here. When I wrote that piece, I looked at Cobra Kai both from a storytelling and business standpoint, trying to understand every nuance of this sleeper hit that was underestimated from the day it was announced. It went on to defy all odds and become a universally loved sequel to a cherished franchise. The one piece of the puzzle that took some time to dissect was understanding why the creators went with YouTube Premium as opposed to a more established platform like Netflix, Hulu, or Prime.
As I did my research for the first article, I discovered that the show’s creators, Jon Hurwitz (Twitter: @jonhurwitz), Hayden Schlossberg (Twitter: @McSchlossberg), and Josh Heald (Twitter: @healdrules), had numerous conversations and pitch meetings and that most, if not all of the major streaming services expressed interest. After all, this was the project that would reunite original Karate Kid actors, Ralph Macchio (Twitter: @ralphmacchio) and William Zabka (Twitter: @WilliamZabka), reprising their iconic roles. Who wouldn’t want to be the streaming platform to showcase that overdue reunion? I learned that they went with YouTube because the executives were warm, personable, and strongly supported their vision for Cobra Kai. It’s akin to choosing to work for a startup with a lot of promise or because of a new boss you really like.
The Miyagi Do School of Market Strategy: “Sometime when take trip, better know where trip end. Otherwise better just stay home.”
I don’t need to tell you that Cobra Kai defied all expectations. It became a smash hit, racking up tens of millions of views for its first two episodes and YouTube immediately greenlit a second season that promised to be bigger and better than the first.
Meanwhile, the fandom surrounding Cobra Kai exploded. The show inspired new content creators that analyzed and dissected every nuance, plot point, and character. Moreover, these podcasters, YouTubers, and bloggers were actively engaging with the creators and stars of the show.
“Right in front of a thousand people.” -Terry Silver (The Karate Kid Part III)
A notable example is Peter Veunnasack (Twitter: @RipCitizen). His day job is working for the USPS as a mail carrier. During his off-hours, he is one of the most prolific content creators catering to Cobra Kai and Karate Kid fandom. Peter hosts the podcast, Cobra Kai Kompanion(Twitter: @CobraKaiPod), along with Karate Kid superfan Brihana Davidson (Twitter: @brihana25), a gifted artist who has created Cobra Kai fan art so good, Sony and Netflix should consider canonizing it as official marketing material. Through the podcast, Peter and Brihana have spoken to the creators and many of the actors and actresses from Cobra Kai and the Karate Kid films. The content serves an important role, giving fans news and behind-the-scenes insights that helps fill the void between seasons. In addition, the Kompanion Facebook group is one of the most enthusiastic virtual communities devoted to the show, bringing fans together from all over the world. It’s what happens when a sequel becomes its own cultural moment.
To their immense credit, the creators and many of the people working on Cobra Kai have proactively engaged with the fans, answering questions on Facebook, Instagram, and Twitter. Unlike other mega franchises, the creators don’t shy away from interacting with and embracing the fans, answering the most minutiae of questions, even the ones they’ve heard for the umpteenth time. (I predict “Terry Silver” and “Mike Barnes” will soon become this generations’ “Where’s Waldo.”)
As I wrote in 2018, the Cobra Kai social media accounts engaged with fans, using “marketing judo,” to inspire them to become the show’s biggest evangelists.
In 2019, Cobra Kai gave us a worthy second season proving that it wasn’t a fluke or a one-trick pony. The show brought back film favorite baddie Martin Kove as “Kreese,” and gave diehard fans moments they didn’t know they wanted, including a surprise, tug-at-your-heartstrings reunion of the original Cobra Kai gang. The show also provided a jaw-dropping finale that set up an even grander storyline for season 3, which YouTube greenlit after releasing season 2. Critics continued heaping praise while fans advocated for the show, blitzing it out on social media, telling friends, family, neighbors, and everyone else to check it out.
“It’s a perfect storm of nostalgia, relevance, marketing savvy, and really good storytelling that knocks it out of the park. Its success is a feel-good story about a feel-good mythology.”
Flash forward to spring 2020. We’re quarantined in the midst of a pandemic and fans are clamoring for Cobra Kai season 3 with anticipation at an all-time high. And yet, YouTube Premium was eerily silent.
The Miyagi Do School of Business Pivots: “Even if win, you lose.”
While Cobra Kai was a runaway success, I think it’s safe to say that YouTube Premium was not. Case in point: name any other scripted show from YouTube Premium or better yet, ask someone who isn’t a subscriber. Now name (or ask someone who isn’t a subscriber) just one show from Netflix.
See my point?
Cobra Kai was the gauntlet for YouTube Premium to become a serious contender in the streaming wars, which has since become saturated with powerhouses like Disney entering the picture.
Before we get to that, let’s start with rule number one: “Karate for defense only.”
Actually, I was thinking about the other rule number one, the one that applies to business. For every dollar you invest, you want to make at least two if not three or more. YouTube Premium wanted one thing to result from its investment in scripted content: a flock of monthly subscribers for around $10 a month. Netflix has built up a one billion dollar a month revenue stream from its subscriber base. You read that correctly, billion with a “b.”
YouTube, which has been around since 2005, has become the dominant platform for independent creators to taste test dollar store foods, become their own film and TV commentary critics, unbox random gifts, stream themselves playing video games, and more. Over the past decade and a half, it has exploded into a juggernaut social media channel that has monetized itself through ad revenue overlaid on top of crowdsourced content created by everyone and anyone with a smartphone.
Cobra Kai represented a marked shift towards a wholly different revenue strategy. In greenlighting this and other scripted shows, YouTube was attempting to break into a more subscription-driven revenue model.
In some ways, YouTube was a natural contender to become the next Netflix and with the runaway success of Cobra Kai’s first season, the potential was certainly there.
However, as good as Cobra Kai was, it was not enough to sustain an entire channel’s success. Many, myself included, took advantage of YouTube Premium’s free trial to binge the show and then cancel before the billing kicked in. While I was a trial subscriber, I looked at the channel’s other offerings and none of them piqued my interest.
Similarly, on social media, many lauded Cobra Kai, touting the free YouTube trial and promoting it to their friends and neighbors. While I’m not privy to YouTube’s internal numbers, I’m guessing this didn’t translate into many long-term customers.
As I argued in the 2018 article, there were two things that YouTube Premium needed to do to become a serious streaming contender: 1) continue supporting Cobra Kai, and 2) create more compelling content. Hurwitz, Schlossberg, Heald, and co. more than succeeded with the first, exceeding all expectations with Cobra Kai’s first two seasons. However, YouTube Premium failed to create more content that would bring a massive influx of paid subscribers.
Things got dicier as Cobra Kai grew in popularity but YouTube Premium did not. On social media, fans clamored for a physical media release with many outright saying they would not subscribe to YouTube but would gladly buy the show.
Ominously in May 2018, as Cobra Kai hit its stride, the official Twitter accounted posted that it would not release the show on physical media.
“You don’t enter and that affects my financial future.” -Mike Barnes (The Karate Kid Part III)
I was disappointed but not entirely surprised. I speculated that a physical media release would not bring a lot of ancillary revenue to YouTube while disincentivizing new subscribers to the platform. I also guessed that this would not be the final word on a physical media release.
In 2019, Cobra Kai season 2 debuted to big numbers with continued positive critical and fan response. Despite this, YouTube Premium couldn’t get over the free trial hump to become a true competitor to Netflix, Hulu, or Prime. While this is speculation on my part, there are some telltale signs to support this conclusion.
First, 2019 marked a shift in YouTube’s release strategy. They decided to temporarily remove Cobra Kai from the paywall, showcasing a freemium version monetized with ads. In doing so, it was marrying its traditional revenue strategy with its scripted content. However, it was a halfway measure with YouTube putting a time limit on the freemium version while continuing to tout the subscription route. I imagine this resulted in more confusion than subscribers.
Second, Sony and YouTube released Cobra Kai for digital purchase on iTunes, Vudu, and Amazon last fall. They also did a limited DVD release of the first two seasons. It was a 180-degree about-face from the May 2018 tweet. As with the ad-supported version on YouTube, the DVD release was for a limited time only. Those box sets have since become collectors’ items commanding up to several hundred dollars on Amazon and eBay.
These decisions were both indicative of the growing popularity of Cobra Kai but also the tricky spot YouTube must have found themselves in. They had a massive hit show on their hands but were not growing their premium subscriber base enough to sustain itself for the long haul.
This brings us back to spring 2020. Cobra Kai had long ago been greenlit for a third season and fans were eagerly awaiting its release but with little updates and no trailer in sight. Moreover, the official Cobra Kai social media channels had been radio silent for months.
Then, on June 22, 2020, exactly 36 years after the theatrical debut of the original film, the creators along with various trade publications announced that Cobra Kai would be moving to Netflix.
The Miyagi Do School of Exit Strategies: “Best way to avoid punch is no be there.”
Around the time of the announcement, Veunnasack and Davidson spoke with Cobra Kai creators Hurwitz, Schlossberg, and Heald on the Kompanion podcast, which streamed somewhat ironically, on YouTube Live. In the episode, Hurwitz, et al. openly talked about the behind-the-scenes factors that led to this big change.
It’s a fantastic interview and I encourage you to check it out. Stay until the end, because there are two more surprise guests that will show you “no mercy” nostalgia goosebumps.
In the interview, the creators revealed that as early as season 2, they were looking to migrate Cobra Kai off of YouTube with Netflix being one of the main contenders. This didn’t come to pass as YouTube released season 2 and greenlit season 3 in 2019. However, Hurwitz shared that this past January, he and his fellow creators got into several discussions with the executives at YouTube, in which the company announced that it was moving away from scripted content.
After a valiant attempt and a hit show that defied the odds, YouTube was making an exit from what was likely a losing proposition for its long term bottom line.
“Mister Miyagi’s Little Trees was a solid business plan, we just ran into some bad luck.” -Daniel LaRusso (Cobra Kai)
Streaming channels are expensive with content acquisition and development being the biggest overhead cost. Take CBS All Access which spends movie-like budgets per episode for its Star Trek spinoffs Picard and Discovery. Breaking even, much less turning a profit is a significant challenge for any streaming service that has to constantly create new and compelling content to justify a $7 to $15 monthly commitment on a recurring basis. I believe YouTube saw the writing on the wall and decided to make a quick exit.
But the question remained what would happen to Cobra Kai?
The Miyagi Do School of Acquisitions: “Then Miyagi take bus.”
As Hurwitz revealed in the Kompanion interview, the early 2020 conversations with YouTube got the wheels turning on finding the show a new home.
This takes us to the present. Meetings between multiple parties, including the creators, Netflix, Sony, YouTube, and many others you probably aren’t aware that have an ownership stake in both The Karate Kid and Cobra Kai, have been ongoing for months. Negotiations involving revenue and intellectual property ownership rights can be a highly complex process where a lot can go wrong. So for those of you asking “when, when, when,” know that these parties coming together to put together a deal this quickly is no small feat. It’s truly a win-win-win for the show, the parties involved, and the fans.
In many ways, Netflix is the most natural fit for a show like Cobra Kai: an established streaming platform with a massive subscriber base and a global audience. It certainly has come a long way from its roots as a startup DVD mail rental business. Today, Netflix houses hundreds of current and classic hit shows, movies, documentaries, and a plethora of original content. Want to see an ageless Deniro, Pesci, and Pacino directed by Scorcese? How about a docuseries on the crazy world of tiger keeping or a comedy-drama about a women’s prison or a fantasy series that embodies 80s nostalgia? All of that and more is available at your fingertips on your TV, smartphone, or tablet starting at $9.99 a month. Even before Cobra Kai comes to the platform, it offers a ton of content to entice people to punch in those credit card numbers and enter into a long-term relationship.
“True original bonsai worth many thousand dollars.” -Mister Miyagi (The Karate Kid Part III)
The icing on this streaming cake is that Cobra Kai is now a proven quantity. It’s an acquisition that comes with an entrenched fanbase and a record of bringing and keeping lots of eyeballs on the screen. For Netflix, Cobra Kai will join a legion of compelling content that will further cement its dominance as a streaming powerhouse. Essentially, it’s a big fish moving from a small pond into a gigantic ocean.
The Miyagi Do School of Market Maturity: “Hai, one day you do own way.”
With hindsight being 20-20, should Cobra Kai have gone to Netflix in the first place? While what-ifs are best relegated to stories within a Netflix sci-fi series, I think YouTube is a great part of the Cobra Kai mythology. Hurwitz, Heald, and Schlossberg had a crazy idea for a Karate Kid reunion series that was part comedy and part serialized drama. As noted, in several interviews, YouTube Premium was a great opportunity to work with a supportive team that would provide the resources and creative freedom to give fans their vision of Cobra Kai. That YouTube’s scripted content experiment didn’t last beyond a few years should not diminish its contribution to making Cobra Kai the show it is today.
My hope is that being a proven quantity means that Netflix will not mess with a winning formula. Rather, that it will learn from YouTube’s successful collaboration with the Cobra Kai team and lend even greater support, resources, and marketing muscle to the show while granting its creators the creative freedom that made seasons 1 and 2 such a success.
So far, all signs point to a strong start. As of July 1, the first three Karate Kid films are now on Netflix with the first film trending on the platform.
Moreover, Cobra Kai is now a searchable result, and judging by the memes, posts, and excited comments about a blank placeholder, I imagine Netflix must appreciate just how big a coup this was. As the bottom line aptly sums up, “This show is: Exciting.”
I expect this momentum will continue as Cobra Kai lands on Netflix, introducing new viewers to the show while satisfying the legion of devoted fans who have been chomping at the bit for the third season.
Netflix has not only gained a phenomenal show with incredibly talented people working in front of and behind the camera but it is getting a highly devoted and energized fanbase along with it.
“Your student become my teacher.” -Sato (The Karate Kid Part II)
Finally, I predict that Cobra Kai will make a return to physical media. Unlike YouTube, Netflix does not have to worry about sacrificing subscribers by offering shows like The Crown, Orange Is the New Black, and Stranger Things on Blu Ray and DVD. They’re established enough and large enough that they can take a “more is more” philosophy. Given the anticipation surrounding Cobra Kai and its likely success on Netflix, I suspect we may be getting new media releases sometime around the holidays. Only this time, they will be in stock, year-round at Amazon, Target, and Walmart right alongside the aforementioned flagship shows.
“You gotta flip the script.” -Johnny Lawrence (Cobra Kai)
Cobra Kai’s continued success is as epic as the plotlines within the show itself. The migration to Netflix is a prime example of what all great sequels do. They build upon a great first chapter while raising the stakes, taking the story and characters to new heights and unimagined possibilities. In that sense, Cobra Kai truly is “the best around.”
[Full disclosure: I own shares of Netflix [NFLX], Alphabet, Inc. (which owns YouTube) [GOOG], Amazon [AMZN], and Disney (which owns part of Hulu) [DIS], within a diversified investment portfolio.]
John Lim (Twitter: @bemovingforward) is a TEDx speaker and author. In 2018, John wrote the article, “How Cobra Kai is kicking butt at storytelling, marketing, and business,” which to date is his most-read piece on LinkedIn. He has been featured in Cracked.com, Authority Magazine, and two articles for Inc. (“Are You a Part of the Minority? 3 Reasons to Find Your Voice” and “Why Authentic People are Extemely Likeable”). John currently hosts the podcast Moving Forward.