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Netflix's Transformation: Big Data vs. Big Design

@@What enables Netflix's transformation from streaming service to original content provider?@@ 

From a conventional perspective, it's all about big data and analytics or, as the New York Times put it, "giving viewers what they want:"

"Netflix, which has 27 million subscribers in the nation and 33 million worldwide, ran the numbers. It already knew that a healthy share had streamed the work of Mr. Fincher, the director of "The Social Network," from beginning to end. And films featuring Mr. Spacey had always done well, as had the British version of "House of Cards." With those three circles of interest, Netflix was able to find a Venn diagram intersection that suggested that buying the series would be a very good bet on original programming."

This story not only overplays the important role of big data and the power of data analytics. It also creates the false impression that there is a kind of secret location in the collective conscious where “House of Cards” and “binge watching” always existed as a ready-made categories and all that was needed to discover them was cutting-edge data science.

Re-designing the product in accordance with what consumers really want (and using big data to find out what that is) is one strategy to look at Netflix’s shift. But how about retailoring consumers themselves (their expectations, viewing habits, tastes, preferences, and rituals) to the new offering’s needs? Would it still be enough, as Kevin Spacey argued, to “have learned the lesson that the music industry didn’t learn: give people what they want, when they want it, in the form that they want it in, at a reasonable price and they’ll more likely pay for it rather than steal it”?

Apropos music industry. Many years ago, I was still working as a music producer and composer and attending an industry dinner in Cologne, Germany, I had the privilege of listening to legendary music producer Quincy Jones. And so someone at the table asked him the inevitable question: 

How did “Thriller” propel Michael Jackson from soul artist to pop icon?

All he could say, he replied, was that there was a strong focus, not only on Michael’s talent and the music, but also on the kind of listener he had attracted in the past as well as the kind of listener the creative team thought was needed to master the transformation.

All members of the creative team around “Thriller” — from sound engineer Bruce Swedien and video producer John Landis to Jackson sponsor PepsiCo and MTV understood themselves not so much as creators of captivating content but rather as creators of cultural identity and of a new type of American youth culture — one to whom Michael Jackson’s music would become truly indispensable.

For someone who has his home in the world of score, chords and hook lines, I found this a remarkably sociological statement. In essence, production is not about creating the “right” content that people want. It is a large-scale sociological project of creating the kind of audience that the content needs for its commercial success.

Big data’s role in making “House of Cards” a success is well documented. But “House of Cards” and Netflix’s other original formats also have another important role to play in reshaping consumers and consumption patterns in ways that enable the successful shift from Netflix, the streaming service to Netflix, the content provider. 

This sociological dynamic is easily forgotten. Thirty years after the release of “Thriller,” for instance, the “Thriller” team’s “true genius” to have given consumers what they had always wanted easily overshadows their shaping influence on American youth culture.

Markus Giesler

York University, 4700 Keele Street, Toronto, Canada

Markus Giesler draws on concepts from economics, technology studies, and sociology to inform his research in marketing. He determines how ideas and things (products, services, experiences, technological innovations, intellectual property, brands, etc.) are made valuable over time, with research focused on improving marketing strategy through an understanding of markets as evolving social systems. Giesler's research has been supported by the Social Sciences and Humanities Research Council of Canada (SSHRC) and the European Research Council (ERC) and published in top-tier academic journals such as the Journal of Consumer Research and the Journal of Marketing. Giesler has an extensive entertainment industry background. He founded his own record label at age 17 and has worked in various production and marketing responsibilities for over a decade. He lives in Toronto, Canada.