Netflix has Innovated with Data

When Netflix unveiled its DVD-by-mail plan back in 1998, it seemed like a quirky aberration in an economic landscape thoroughly dominated by established brick and mortar movie rental shops. Blockbuster was its biggest rival, but it’s unlikely the giant company saw Netflix as much of a threat. In fact, Blockbuster still had 9000 stores open in 2004.

Just nine years later, though, they’d shutter the last of their corporate outlets, leaving only privately-owned franchises in remote places like Alaska. 

Clearly, Netflix’s vision had paid off in a big way. However, the media giant wasn’t content to rest on its success. In fact, the experts at Netflix knew that technology was on the cusp of changing the way we interacted with media. They were again ready to appear the underdog and launched a streaming service in 2007.

People scoffed at the company’s “Watch Now” concept, considering it too pricey with a poor selection. Netflix, though, was playing the long game, and they had laid the groundwork for a strong and dedicated customer base. While many early adoptees straddled the line and kept up subscriptions to both physical DVDs and streaming services, most people eventually flipped over for the convenience. While 3 million were still using the physical subscription service in mid-2018, it’s a drop in the bucket compared to the 130 million subscribed to streaming. 

Netflix has been able to become the media leviathan that it is by being willing to zig when the rest of the market zags and not being afraid to take a risk. At the same time, Netflix knew from very early on what was at the center of their success: data.

The whole time they’ve been operating, they’ve been collecting data on what customers want, when they want it, how they consume it, and what patterns they can predict. That’s led to innovations beyond delivery and into content creation. 

Blockbuster was taken by surprise by this little competitor back in ’98, but today Netflix is a rival for just about anyone in the media industry from delivery to creation, and their investment in good data used well has been the backbone to it all.

While most people know about this amazing rise to power, there are a lot of little details about Netflix’s innovative efforts that might come as a surprise. 

Netflix Tracks Where You Watch 

Netflix’s data is not limited to just what its users watch. It also tracks where they watch, and this data allowed them to see that their customers were frequently watching Netflix while they were out and about in the world, not just in the comfort of their own homes. 

Using this data, Netflix was able to roll out a new feature that capitalized on these viewing habits. In late 2016, the company announced that customers would have the ability to download content to watch when they didn’t have access to wifi. As the data from this new feature rolled in, they realized how valuable it truly was. In July 2018, building off their innovation, they created “smart downloads” that would automatically delete a watched episode and then download the next one in the series, ensuring a constant stream of available content. 

Netflix Knows What You Want Before You Do

Perhaps the thing that Netflix does best is stay uncomfortable. That means that they are constantly thinking about what will be the next big thing rather than getting comfortable with established success. The company is constantly trying to predict what people will want not just today, but in the future, and that means that they have their fingers on the pulse of both technological advancements and cultural trends. 

As people become more and more integrated with their technology, they will expect it to become increasingly responsive to their wants and desires. After all, when we can ask smart home devices to shop for us and change our thermostats and lighting without lifting a finger, it only makes sense that control becomes an expectation. 

Netflix is extending this desire in an unexpected way: by giving us options in our media content. They initially rolled out this feature in children’s shows where they could practice with the delivery. Now they just launched it to their massive Black Mirror fanbase, and we can expect that they’ll be carefully analyzing the data about what options people pick most often and in what order as well as how they respond to the concept as a whole.

It’s very likely that Netflix has once again tapped into the next big thing before we even know we want it. Don’t be surprised if we’re all choosing our own paths through shows and films in a year or two or maybe even getting to go back and edit the endings of our favorite films of the past.

The Details Matter

Netflix doesn’t just use data to help them make big decisions about content. They also use what they know about consumer behavior to make small decisions customers probably didn’t even think about. One recent example is the changes Netflix made to the UI when hunting for the perfect selection. 

In the past, these menus were static. Now, stopping on a title launches a preview to help users decide if that’s how they’d like to spend their time. Netflix’s reliance on data lets them know that people now spend more time watching and less time browsing, which ultimately means that people are getting a better user experience while discovery gets a major boost. Win-win. 

Netflix knows when we want choice and when we need guidance. It’s not hard to imagine a future where our TV automatically turns on as we enter the room, playing exactly what we’re in the mood to watch, and giving us choices not about what show to play but about how we interact with the fictional world portrayed in our favorite series. In short, Netflix has set themselves up to continue innovation for years to come, and it’s all because of their obsessive data-driven culture. They gather the data necessary to know what works and aren’t afraid to follow it to some surprising conclusions. 

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James Nanscawen

James Nanscawen

For more than 25 years, James Nanscawen has lead organizations (both in the public and private sector) through large digital and cultural transformations. James has deep experience in data governance and data management practices and partners with senior executives globally in the development and execution of data governance programs. James hosts a monthly Thought Leadership webinar series on Data Governance and has written articles on Data-Driven Culture, Data Standards and Data Catalogs. James is the Director of Data Governance at Data Meaning, a Business Intelligence Solutions company.

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