Netflix (NFLX 0.49%) has surpassed Alphabet's (GOOG -1.57%) (GOOGL -1.48%) YouTube as the most popular daily video consumption platform for U.S. teens, according to Piper Sandler's latest "Taking Stock with Teens" survey.

The semi-annual survey, which polled 9,800 teens regarding their favorite brands, found that 34% of respondents preferred to use Netflix, compared to 32% for YouTube. Netflix also beat YouTube in Piper's previous survey in the spring.

A young woman watches a streaming video on a tablet.

Image source: Getty Images.

Netflix's rebound this year ends YouTube's brief stint as the market leader -- in Piper's fall survey last year, 37% of teens preferred YouTube and 35% preferred Netflix.

Netflix's lead against YouTube might seem minor, but it indicates Netflix still remains a top platform for Gen Z viewers, even as challengers like Disney+, Hulu, Amazon's Prime Video, AT&T's HBO Max, and YouTube Premium all try to attract younger viewers.

How is Netflix locking in teen users?

Netflix's global streaming memberships grew 27% year-over-year to 193 million last quarter. That robust growth rate countered the notion that it would lose viewers to Disney+ and other platforms.

Earlier this year, Statista analyst Amy Watson noted that 70% of Gen Z viewers had their own Netflix subscriptions, compared to 65% of Millennials, 54% of Gen Xers, and 39% of Baby Boomers. Piper's latest survey also found that just 9% of Gen Z viewers watched cable TV -- which is dire news for traditional pay TV companies and cable networks.

Netflix seems to recognize the growing importance of the Gen Z market. That's probably why it launched teen-oriented shows like Anne with an E, Shadowhunters: The Mortal Instruments, 13 Reasons Why, and Chilling Adventures of Sabrina in recent years.

Those shows, along with Netflix's expanding portfolio of original and licensed content, helped the platform retain its teen viewers even as new Gen Z-oriented challengers like Snap Originals on Snapchat gained momentum with younger mobile users.

What does this mean for YouTube?

Google finally started disclosing YouTube's ad revenue earlier this year. The platform's ad revenue rose 18% year-over-year to $7.85 billion in the first half of 2020, which is significantly lower than Netflix's $11.92 billion in subscription revenue during the comparable period.

Google didn't disclose YouTube Premium's subscription revenue separately, but the company revealed that YouTube Premium and Music had a combined audience of just 20 million subscribers at the end of 2019.

A woman plays a streaming video on a laptop.

Image source: Getty Images.

YouTube remains a top destination for Gen Z viewers, but several cracks are appearing. YouTube Gaming still remains far behind Amazon's Twitch in the video game streaming market, younger stars on ByteDance's TikTok are stealing the spotlight from YouTube's stars, and YouTube recently canceled several of its original scripted shows and handed its popular Karate Kid spin-off Cobra Kai to Netflix.

YouTube also continues to expand its platform into a music streaming service to challenge Spotify, but that transformation has been confusing due to Google's awkward attempts to pull older apps (like Google Play Music and YouTube Music Key) back under the same umbrella.

Therefore, there's a growing sense that YouTube is becoming a jack of all trades and a master of none, since its attempts to chase Netflix in the premium video market, Twitch in the game streaming market, and Spotify in the music streaming market all fell short of expectations.

The key takeaway

Netflix's strength in the teen market won't derail YouTube's growth, since teen viewers still seem to be watching both platforms. But it highlights YouTube's failure to evolve into a full-blown Netflix competitor, as well as its struggle to convert its Gen Z viewers into paying subscribers.

In short, investors should keep an eye on the ongoing battle between these two streaming video platforms, even though they operate different business models and have very different expansion strategies.