A senior Netflix executive recently presented his company’s strategy of continuous innovation.
It reveals how BIG DATA drives the personalization of programming decisions.
- It’s a very useful read for anyone who is pitching to a SVOD service.
- (Don’t miss my in depth coverage of Netflix and the SVOD market.)
Enjoy my selection of slides from the “Innovation at Netflix” presentation! My occasional commentary is in italics.
- Global Internet TV
- Subscription service: watch any amount, at any time, on any device – no commercials
- > 125 million members
- > 190 countries
- > 140 million hours watched per day
- Enterprise Value: $160 Bn
- Approximate headcount dedicated to Innovation: 530
- Netflix tests and tracks how you respond to every pixel on your interface.
- Above are several “Recommendation” tools that can be tested and personalized to best fit your preferences.
- Continuous improvement is driven by the efficient, quantitative analysis of properly-conceived tests
- There is one BIG metric on this slide: “Bottom line“
- Revenue for a subscription service is driven by two factors:
- new member acquisition, and
- retention of existing subscribers.
- Managing and minimizing “churn” is a relentless focus of subscriber-based businesses.
- The age-old drivers of direct-response marketing are:
- Test, with highly controlled variables
- Analyze the results
- Roll out with the winners
- Discard the losers
- Example: A/B Testing of the UI / User Interface: Which one works for you?
More Slides on A/B Testing Follow:
Samples of Other Tests:
No “Added Value” Content
- At Sunny Side of the Doc, Knowledge Network Canada’s Rudy Buttignol highlighted how the Netflix model resembles the old video store: It’s all about the video!
- His Takeaway is that public television commissioners got carried away with delivering extra digital content and other ancillary stuff.
- Rudy argued that the success of the Netflix model is a call for broadcasters to get back to the basics.
- Netflix’s direct marketing model is very familiar to industry veterans who worked for Time /Life, CBS/Columbia House, Readers Digest and other continuity marketers.
- These legendary publishing businesses added video to their successful print model.
- They commissioned hugely successful, long-running series that were delivered by mail in VHS or DVD formats.
- The big differences then and now:
- Tests are relatively slow and costly when they involve print and postal services.
- Netflix’s online test results are immediate.
- During my time at CBS Enterprises, I worked on the hit continuity series “World War II with Walter Cronkite.” The margins were eye-popping
- How to Measure and Value Audiences for Unscripted Programs with Parrot Analytics’ Courtney Williams
- Trends in How Americans View, Measure and Value Programs with Byron Media’s Dr John Morse
- Program Development & Pitching Trends with Michael Hoff
Updated August 2018
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