Big Data and Analytics Help Netflix Succeed
Tue, April 20, 2021

Big Data and Analytics Help Netflix Succeed

Thanks to Netflix’s several global hits and steady revenue streams from their then-125 million subscribers that have now grown into 158 million as of the third quarter of 2019, the streaming platform can take risks, produce the content it wants, and hire the right people to make their products a success / Photo by: bennymarty via 123RF

 

Hollywood was concerned about Netflix having multi-billion dollar deals with celebrities like Shonda Rhimes, Ryan Murphy, or the Obamas to create content for the platform, wrote Enrique Dans of business news site Forbes. The traditional movie industry leans on a business model that heavily depends on sequels, prequels, and reboots of popular movies from several decades ago. The success of the film will depend on a number of random or unknown factors. 

Thanks to Netflix’s several global hits and steady revenue streams from their then-125 million subscribers that have now grown into 158 million as of the third quarter of 2019, the streaming platform can take risks, produce the content it wants, and hire the right people to make their products a success, said Dans. It also has 5.5 million free trial customers. Netflix was also valued at $164 billion in 2018, surpassing Disney ($152 billion) as the world’s most valuable media company, according to Amy Watson of German statistics platform Statista.

What’s the secret to Netflix’s success? Big data and analytics. 

 

Netflix Is the Winner

Netflix, which was founded in 1997, ventured into the vast world of big data when it first began as a subscription mail-order DVD company, explained Jon Markman of Forbes. Distributing the discs in via prepaid mailing was disruptive that it brought nationwide goliath Blockbuster Video to its knees. But Netflix’s strength did not rely on shiny DVD discs. Rather, it was predictive analytics. The platform’s use of big data was truly commendable. Its software engineers created algorithms to make customers stay away from high-demand blockbusters, allowing them to access its less-known but equally interesting and enjoyable titles. 

The business model proved to be was a huge success. As the years passed, Netflix’s prepaid mailing was replaced with online streaming and content creation. As before, data analytics played an essential role in helping Netflix to grow even more. For example, its original series “House of Cards” was released in 2013, shocking the industry by investing $100 million in the political drama. The best creative talents were hired and as expected, it led to success. Executives leveraged big data to analytics to “to inform all of the most important decisions.” Based on the subject matter, remnant fans of the original British series, and the appeal of actor Kevin Spacey and director David Fincher, Netflix algorithms showed that the finished product would be a huge success. 

It’s the same with “Bird Box,” the film based on Josh Malerman’s novel. Netflix got Sandra Bullock for the lead role, it was released during the holidays, and got plenty of free advertising inside the Netflix app. The result was a huge viewership. The platform’s official Twitter account declared that “Bird Box” was watched by 45,037,125 subscribers in the first seven days of showing.

Interestingly, the casting appeared to deviate from its source material norm. For instance, Bullock was 54 years old in the film but Malorie, the character Bullock played, was depicted as young, athletic, and reluctantly pregnant in the Malerman novel. Malorie’s interracial love interest, Tom, was played by 28-year-old rising star Trevante Rhodes. 

There were mixed reviews for “Bird Box,” but it appealed well to a carefully targeted audience. Netflix can thank analytics for that. 

Non-Box Office Hits: A Unique Approach to Gathering Data 

But it’s not always box-office hits that provide useful data. Netflix’s “Bandersnatch,” an interactive adventure story, also played an important role in its big data endeavor. “Bandersnatch” took the unusual route of letting the audience choose the plotline they like for the show. It was also brimming with Easter eggs and clever symbolisms that it was not surprising for the interactive story to open up new business models. Jesse Damiani of tech and media news network The Verge theorized that Netflix is building data profiles to see what plots work well with certain audiences. 

He added, “‘Bandersnatch’ represents a new form of data mining that gives Netflix richer, more specific audience information than it’s ever had before.” The data can be used to steer choices among writers or even in discussions on what sort of projects the company can do next. Hollywood heavyweight Steven Spielberg may insist that Netflix is in the “minor league” as it uses television rather than the big screen to distribute its products but we must take note that its goal is to dominate all content, not just television content. 

Netflix stated that big data is still secondary to creativity, signing opportunities, contracts, or development, and ideas related to the film’s production. These factors comprise 70% of the decisions while 30% are dedicated to big data / Photo by: wrightstudio via 123RF

 

Big Data Is Not Magic

Netflix stated that big data is still secondary to creativity, signing opportunities, contracts, or development, and ideas related to the film’s production. These factors comprise 70% of the decisions while 30% are dedicated to big data. Chief content officer for Netflix Ted Sarandos explained, “Choosing content and working with the creative community is a very human function. Data doesn’t help you in that process; it helps you evaluate the investment.” 

Outside of Netflix, how much would change if organizations resort to harnessing the power of proper analytical data architecture instead of relying on management’s “intuition?” Netflix’s success proves that if we consistently utilize data analytics, decisions will be better made, the risks will be more balanced, and the results will be more advantageous.

Indeed, success in the content industry relies on business models that take advantage of highly detailed data as well as having well-trained sophisticated data and algorithmic models to understand all aspects of a business.  
Forget prequels, sequels, and reworks of previous films. Netflix takes advantage of big data and analytics to make the most important decisions, understand users’ preferences, and cater to a specific audience. And, lest we forget it, its creative pursuits still reign supreme over big data.