Home Big Data How does Netflix Use Big Data? – A Success Story

How does Netflix Use Big Data? – A Success Story

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Today Netflix is known to be the most successful media business in the world; all thanks to Big Data and analytics.

Did you know, Netflix has a company valuation of $300 billion approx. and it has been found out it has even surpassed Disney as the most valued media company in the world. They have an impressive customer retention rate which is 93%. Comparing it with Hulu which is 64% and Amazon Prime to be 75%. Even though their customer retention rate has played a big part in their success yet we can say it is not just this fact that has helped them retain most of their 151 million subscribers. Who else has helped them become this much successful? Well it is the use of Big data and Analytics.

In this article we are going to talk about how Netflix uses big data and analytics.

In cable television, there is only a 35% chance that a show will be renewed after its first season. But with Netflix, 93% of the original TV shows were renewed. How was this possible? Well, it was all because Netflix was able to figure out what the audience want, the type of shows they prefer etc. And they were able to pull this off successfully all thanks to big data and analytics.

Success story of Netflix:

Here, we are going to talk in detail about how Netflix managed to become this much successful using big data and analytics.

The plan behind this success is that Netflix collects data from their 214 million subscribers and implement the data analytics model in finding out the customer behavior and buying patterns. Netflix states that almost 80% of their viewer’s activity is based off personalized recommendations. Meaning, Netflix collects different data points for creating a detailed profile on its subscribers. Now this profile is quite advanced and far more detailed than any persona created through conventional marketing. This information is then used to recommend movies and TV shows as they are totally based on their subscriber’s preferences.

Netflix Data Analytics

Points Netflix Put into Consideration:

To explain this in simple words, let us take a look at an example that can help you understand what type of data Netflix actually gathers. When you watch a movie or TV show on Netflix, it knows the time and date you have watched it. With that, Netflix also knows the device that you used to watch the show. And for any reason, if you have paused the show, did you resume watching after pausing? Similarly, if you pick a TV show on Netflix, do you finish it entirely or not? And even the time it took you to finish a show. Thus these type of details are analyzed by Netflix and not just yours but all the 214 million subscribers Netflix has.

Going further, Netflix has rating content available and the number of searches you made. So you see, with these points, Netflix can easily create a detailed profile on its users. Now to collect all this data and then extract meaningful information out of it, Netflix needs data analytics. This ability to first collect and then use the data is the biggest reason behind Netflix’s success.

Similarly, you get a lot of recommendations on Netflix based on a particular movie or TV show you have just watched? Did you ever think about how Netflix does that? Well, it uses a recommendation algorithm that suggests TV shows and movies based on your preferences.

So you see, Netflix is able to take care of the needs of 214 million users. And all of this has become possible only because of big data and analytics. Netflix has claimed to have earn over a billion in customer retention how, because the recommendation system has accounted for over 80% of the shows or movies steamed on the platform. Check out the best Big Data Certifications here.

Family watching NetflixFurthermore, Netflix also uses other big data and analytics tools for deciding whether or not they want to greenlight original content. Now for some people, it might seem like Netflix is wasting their money on getting whatever they can but instead they tend to greenlight original content based on deep research and careful consideration.

Conclusion:

So this is how Netflix was able to become the world’s successful media business. And this clearly shows how important big data and analytics are and the miracles it can do. Therefore, read this article today and understand how Netflix implemented big data and analytics to their business and never stop learning.