How Big Data Helped Netflix Become a Force to Reckon With

Finally the entire buzz regarding Netflix being launched in India has turned out to be true. The popular provider of on-demand streaming Internet media has been launched in India along with 130 other countries. Many DTH operators might feel the heat but it would be too soon to assume the real impact, as the Internet bandwidth in India could be a deterrent, especially in tier II and III cities. Big data and analytics have played a key role in Netflix’s success, which it has managed to leverage at the right time, well ahead of others.

How Netflix Leveraged Big Data

Through the popular American drama series, House of Cards, Netflix brought television to the Internet and now, its worldwide presence is set to increase manifold with this launch. Before producing House of Cards, Netflix knew through its users’ browsing behavior that Kevin Spacey and David Fincher’s movies were popular among them. Also, the British version of House of Cards, which was released in 1990 was very popular at that time which made the company to give a go-ahead to this $100 million investment for creating a U.S. version of House of Cards. This high degree of confidence and trust based on the director, the producer and the actors was only made possible through intricate algorithms which helped Netflix to determine people’s interest in political drama.

In a nutshell, it knew about the exact type of content requirement of the market and House of Cards was a content mass-personalization effort on its part based on real-time user analysis. So, whenever users visit Netflix homepage they leave a digital trail that the company routinely mines to understand their preferences.

A few things that Netflix tracks are:

• The date/day/time when content is watched
• User zip code
• Device type used
• If the content is paused
• User ratings
• Searches
• Browsing behavior

It doesn’t end there. In fact, it was Netflix’s’ understanding of its audience behavior through back-end big-data analytics that made the company so sure about the success of its other high-end productions like Daredevil and Jessica Jones based on Marvel Comics post House of Cards. In the last five years, 23 Hollywood movies based on DC and marvel comics characters have been released. Netflix tapped all such content market information and from renting out third party content in 1997 through mail subscription, it geared itself into original content development from 2013 based on user information gathered in the last couple of years.

This is a major event in the annals of online content streaming industry and big-data analytics has played a major role in it. India is a potential niche market for Netflix and availability of great variety of content can be a major draw. Online content streaming has been around via YouTube, Yahoo and Hulu to name a few, but the key flagship brand like Netflix was missing.

Big-data Virtualized

Netflix has adopted some of the most sophisticated Big Data tools with primary focus on customers and technical professionals who constantly tweak the algorithms based on analytic reading. With online streaming television already pre-loaded with a wealth of data on user viewing habits, Netflix can make a mark and stand out, provided it uses the right talent and direction. Add to that the fact that Netflix doesn’t blindly pick any movies for streaming as licensing cost is very expensive, so consumer data is used to make a decision.

Netflix creates a profile based on users’ choice

Consumer Intimacy

Open the Netflix webpage for sign-up and you can see on the page, “Just two more steps and you’re done! We hate paperwork too.” This no-fuss approach in the age of instant gratification where consumer is just a click away from loads of content is an added plus for the brand. This not only helps the user but also the brand which knows the kind of data required for generating targeted behavioral information once a consumer starts using the services. From users’ viewing behavior to analyzing independent search terms Netflix has all the data it needs for a sound decision making when it comes to content production.

To Conclude…

By deploying analytics and data companies can run their business effectively and its use is crucial for them to maintain a competitive edge over their peers. All has not been rosy for Netflix though, as there have also been many concerns on the important ethical question of consumer privacy is raised. Netflix has been in soup over this in the past few years. It violated fair-trade laws and a federal privacy law protecting video rental records, when it launched its popular contest – Netflix prize – in September 2006 for the improvement of in-house algorithm, called Cinematch. It was sued for releasing the plaintiff’s dataset to the contestants which identified her sexual orientation. Later, a settlement was reached with the plaintiff.

Overall however, the company has done well for itself by using Big Data. Let’s see how the company does in India.