Netflix and Data Analytics

Growing up I always remember the comedy sitcom ‘Seinfeld’ being on TV around 7pm every week night. My family would religiously watch for an hour every night, including Thursday when they would air a new episode.

I bring this up because over this past weekend I set up Netflix for my dad, so he could watch the new stand-up comedy show ‘Jerry Before Seinfeld’. Prior to this my Dad just watched TV and used onDemand a bit but typically stuck to what was on TV at that time. I knew trying set up Netflix on the computer would be too much for my Dad, but now with the ‘app’ section on TV, I could easily set him up an account so he could watch more shows. After setting up his account he sat down and watched the ‘Jerry Before Seinfeld’. What this all reminded me off, was over a decade ago, when I wanted to watch a stand up special I had to take to HBO or Showtime. Those days of specials on HBO and Showtime is long over.

Image result for jerry before seinfeld

If you look through Netflix’s line up you will find top comedians that include, but not limited to, Jerry Seinfeld, Dave Chappelle, Bill Burr, Joe Rogan, Tracy Morgan, Jim Gaffigan, Amy Schumer, Chris Tucker, and Cedric the Entertainer. Beyond stand up acts many other comedians have taken to Netflix to produce original sitcom shows like Wet Hot American Summer, Friends from College, and Flaked. Netflix continues to shift it content to satisfy the viewers which means the content is always adapting to what people want.

Netflix has crunched the numbers and found out comedy was the most popular genre among viewers between the ages of 18-34. Because of the data analytics, Netflix has decided to jump into the stand-up comedian world. Netflix’s goal is to upload one standup special each week during 2017. Netflix first started launching stand up acts in 2012 with Bill Burr and he launched another special this past summer.

Paired with data analytics, Netflix sat down and made an adjustment to the course that they were on. The numbers said that viewers wanted to watch stand up specials, and launching a new Netflix original drama could cost them in the Billions, while launching standup’s only costs them $100 million.  Netflix has decided to invest in paying for big talent; Dave Chappell and Chris Rock inked deals that required each to produce 2.5 hours of content, each comedian was paid $20 million. Netflix also attracted Jerry Seinfeld with $80 million package deal which includes two specials and his web-series ‘Comedians in Cars Getting Coffee’. Netflix tries to attribute their shift into comedy as a contributing factor to the addition of 5 million subscribers in the third quarter of FY ’17 which increased their stock by 8%.

Data analytics is a key factor to the success of Netflix. It helps them in two ways. (1) Removing content that a specific viewer will not watch and only showing programs that a particular viewer will enjoy. (2) Tracking what viewers watch (and enjoy) allows Netflix to shift the content to satisfy the needs of the customer. Netflix has shifted many times since its first inception and I can attest to these shifts because I used to have movies delivered to my college mailbox so my friends and I could watch different movies. Back in the day I would log onto their website and update my queue every few weeks in order to get the movies that I wanted shipped to me. Since then Netflix has shifted from a movie delivery service to an online streaming platform which then shifted a platform that delivers original content.

Netflix is using technology to help them make decisions on what is the best direction for their company. Decisions that might have once been made on “gut decisions” can now have analytical data to support the decision to adapt the company or not. The company has unlimited data on their viewers just based on the shows that they watch or don’t watch. This data has informed decision makers so they can justify the $80-million-dollar price tag that Jerry Seinfeld demands, to give viewers the content that they want.

 

8 comments

  1. I had no idea Netflix was investing more in comedy shows! The data behind Netflix’s millions of users gives both Netflix and Netflix users many perks and advantages. Specifically, Netflix has a competitive edge over regular TV stations when deciding what types of shows to invest in. Additionally, Netflix users benefit from recommended TV shows that are curated specifically for each individual user. I love being able to log into my account and choose a show or movie that I am almost guaranteed to like, without any idea of what I want to watch.

  2. Netflix’s unique, original content definitely gives them a competitive advantage. I recently read an article about how Netflix is constantly evolving their business by hosting focus groups to better understand their consumers. With Hulu recently becoming the first streaming service to win an Emmy for outstanding drama, it’s imperative that Netflix continues to stay ahead by relying on their viewers’ data and information about their target markets. I think Netflix’s investment in big talent is a great move, as it is something that other streaming services have not yet done to a great extent.

  3. Matt, such an interesting story. I did the same for my parents and Amazon Prime when they wanted to watch Man in the High Castle. This also reminds me of the Netflix Prize – https://en.wikipedia.org/wiki/Netflix_Prize. I love when companies are able to successfully integrate analytics into their work, especially when they can crowdsource and limit their own resource usage.

  4. Netflix has grown and adapted very well. I remember getting movies in the mail too and I was so excited when they introduced streaming. They have used analytics to continue innovating, especially with recommending shows and movies that you may like based on other thing you have watched. I have found many of my favorite series with this feature.

  5. I love how Netflix tries to chose the next big TV series or Movie we can watch! Also, other than data analytics to invest in the next big thing (like Comedy, which I also had no idea) they use data to suggest the movies you will like depending on what you have seen. I find that fascinating and also creepy at the same time. Probably they also use more data from other services or other things you purchase from other venues like Fandango? or Atom? Who knows…
    It’s also amazing how last year they had 53 nominations for Emmy’s and this year almost doubled to 96. Just behind HBO, who was the king of TV. With this and the Billions they are pouring to content and which we have discussed already, now more than ever. CONTENT IS KING.

  6. Makes alot of sense for Netflix to invest in comedy. That’s one great advantage that Netflix has over traditional TV, the data to begin A/B testing the programming options. What they need is to get some facial recognition capabilities, so they know who is actually watching (and what part of the screen they are watching on each show).

  7. Nice blog. It will be interesting to see what the breakeven point will be for original content vs replaying movies / network tv. In the last 2 years or so, I can see shows leaving Netfix and original content ramping up. I think there’s a trend (I know CBS is ramping this up) for networks to remove their content from streaming sites and introduce their own on-demand apps/channels. I think in order to appeal to the masses, Netflix may have to start paying more for movies / network tv.

  8. Nice work! Netflix is definitely harnessing analytics to create the most value for its consumers as possible, and I think others will follow suit. In another class, we recently discussed how Netflix also used data to determine the makeup of their original shows, which has both worked for and against them, showing that using data only can have its downsides as well. You had some great data in here– one best practice we caught on to last year is that it’s really helpful if you link your sources to a word/sentence when you’re talking about them so people can find out more about the topic if they’re interested!

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