How Netflix Uses Data to Achieve Cinematic Perfection
By Natasha Sinha '18
Netflix has recently become not only a distributor of movies and shows from other networks, but a creator of original series, as well. This strategy has developed over time from Netflix’s tactical collection and analysis of user data. For example, the on-demand media giant analyzed user data on streaming behavior to determine that most customers are avid fans of Kevin Spacey, the award winning actor from The American Beauty, and David Fincher, director of The Social Network. Using such data, Netflix created a predictive model to find the “perfect” TV show, House of Cards, and purchased production rights, outbidding both ABC and HBO. Executives at the company were so confident in its success that they immediately commissioned 26 episodes spanning over two seasons.
With data from over 25 million users based off of 30 million plays, 4 million ratings, and 3 million searches per day, Netflix’s database is huge. TV and movie producers have always used data to understand consumer desires, but Netflix’s approach is different as it acquires consumer data in real time. The online streaming service keeps track of every move users make on the website, from time of day that shows are watched, to time spent selecting a show, to how often users pause, rewind, fast forward, or stop a show. How such moves affect viewers’ enjoyment is also tracked, and used to recommend other content. Currently, 75% of subscribers choose movies and TV shows based on the recommendations, and Netflix strives to increase this number.
In addition, Netflix has recently decided to make their original series even more original by using its own studios instead of relying on outside ones. Such a transition will pose new risks, such as hiring the right talent and managing budgets, but will also lessen the reliance on other major media companies like Time Warner Inc. and 21st Century Fox, who are currently reassessing their partnerships with Netflix.
Netflix’s use of big data analytics has placed them as a leader within the broad Internet technology industry. In fact, according to Sandvine, a networking provider, about a third of the downloads on the Internet during peak periods on most days are for streaming movies from Netflix. However, Amazon -- perhaps the company’s biggest competitor -- acquired Netflix rival Lovefilm and analyzed its collection of user data to jumpstart a competing streaming service, which is now known as Amazon Instant Video. Furthermore, having created the “recommendation” tool before Netflix even existed, Amazon has a creative edge of its own in data analysis infrastructure - so much so that it poses a potential threat to Netflix.
Netflix’s data-driven strategy to see into the future and produce original shows will revolutionize the entertainment industry. Currently, the company is producing new episodes of “Arrested Development,” “Hemlock Grove,” and “Orange is the New Black,” along with others. With such a strategy in place, Netflix will undoubtedly continue to craft the “perfect” movies and shows.
Sources:
https://www.linkedin.com/pulse/amazing-ways-netflix-uses-big-data-drive-success-bernard-marr
https://gigaom.com/2012/06/14/netflix-analyzes-a-lot-of-data-about-your-viewing-habits/