Making Smarter Business Decisions with Big Data: A Netflix Case Study

With the recent release of its fourth season, the political drama, “House of Cards” was, and continues to be, a huge success for the online video-streaming tycoon, Netflix. “House of Cards” has garnished critical acclaim: its first season, released in 2013, was nominated for 13 Primetime Emmy Awards and 4 Golden Globe Awards, the first Web-only show to ever receive any such nominations. The popular ratings website, IMDb, scored “House of Cards” a 9.0 out of 10, placing it in the upper echelon of television and online programming. So what’s the secret behind the show’s huge success? A little creativity, and a lot of data.

The emergence of the digital age has provided businesses innumerable data points to collect, analyze, and use to draw actionable insights. While businesses have long been able to track consumer clicks and online actions, the growth of big data tools has allowed businesses to supplement this already vast consumer dataset with social media data, text analyses, and sensor data (just to name a few). This access to rich and varied data sources allows businesses to act on a unique profile of consumer behavior and preferences created from the data in order to make smarter decisions.

Netflix has leg up on its cable counterparts due to the large amounts of data the company is able to collect and analyze. The company meticulously gathers qualitative data within their digital offerings. To classify each movie or series, Netflix has developed over 75,000 genres, designed with great specificity to help tease out the major themes that resonate with viewers. The company supplements the genre classifications by recording various cinematographic components, like volume, color, and scenery of each movie or show. Netflix attempts to document as many elements as possible that may influence a viewer’s preferences.

Netflix also records a wealth of customer data: every pause and play; fast forward and rewind; user ratings; text analyses on searches and reviews; even what shows were watched, at what times and on which devices. Each data point can be analyzed to gain deeper insight into overall customer engagement in their content. The Netflix team puts all these data bits together, analyzing the patterns that emerge to create a “persona” for each of their 75 million (and growing) users.

In the company’s early years, Netflix used all these customer data to improve the algorithms used to generate new show and movie recommendations for their users. By providing recommendations that better resonated with the customers’ interests, Netflix hoped to continue to engage and keep them as subscribers. The strategy has been a booming success, with Netflix “binges” becoming a pop-culture norm.

When Netflix decided to throw their hat into the original content ring, their extensive customer dataset gave them an advantage over competitors. Netflix challenged their creative team with developing not just an average show, but the next hit series. After much work, Netflix hedged their bets (and over 100 million dollars) on the success of a new political drama series, “House of Cards”.

Netflix turned to their customer data to draw actionable insights for their new show. For example, they used it to pick their lead actor, Kevin Spacey, and producer David Fincher, whose prior endeavors had drawn and held the attention of large audiences. They also predicted that a political drama, akin to “West Wing,” would be more successful than say a political sitcom. Netflix continued to consult their consumer dataset to help select other actors and show themes, and even to drive cinematography decisions.

Netflix was confident the data and their creative team had found a winner with “House of Cards,” but the company again turned to their data to effectively market and advertise the new series. Show promotions were tailored to each individual viewer: which characters were shown, the themes that were expressed, even the color palettes, were all matched with what the data indicated would resonate with the specific viewer. Every little detail was carefully calculated from the wealth of data they had collected and analyzed.

The arduous hours of data collection and analysis paid off. In “House of Cards,” Netflix produced a winner that truly resonated with its customers. Now as its metaphorical first term comes to a close (i.e. its fourth season), “House of Cards” continues to garner great praise from critics and warrant “binge-worthy” status from viewers.

The case of Netflix and the development of “House of Cards” not only illustrates the growing importance of big data in the business world, but also highlights the growing need for workers that are able to make sense of data: to look for trends and patterns; to ask questions of the data and seek answers; to take millions of disjointed data points and whittle those data down into a handful of meaningful insights. Netflix didn’t hit on “House of Cards” simply because they had the most data; they created an award-winner by combining a wealth of useful data with the creativity and data sense to draw true meaning from the actions of their over 75 million customers.

Using data wisely and productively will require new skills, not just in the business world, but in a wide variety of endeavors. It’s ODI’s mission to understand the data skills we should be teaching in K-16 schools to help people make informed decisions and achieve new insights and understandings using data.

Grade Level: 
Back to Top