Amanda Diable

Netflix Case Study

I think everyone has heard of Netflix and I have a few friends and family members that
are a member. Although, I do not have my own account, I sometimes will use my friend’s or
cousin’s account to watch shows or movies. Personally, with me working full time and attending
school full time, I do not have much time to watch television. Every business has to use data to
improve their services for their customers and Netflix is no different. There are five analytic
methods used by companies which include decision analytics, descriptive analytics, predictive
analytics, prescriptive analytics, and enterprise decision management.

Decision analytics uses known data to make the most informed decisions and involves
knowing what it is to be accomplished. “After beginning as a mail order DVD business, Netflix
became the first prominent OTT content provider and turned the media world on its head;
witness recent decisions by other major media companies to begin delivering OTT content”
(Netflix: Using Big Data to Drive Big Engagement). It was a huge decision for Netflix to change
from a mail order DVD company to a streaming company. “Challenged their creative team with
not just an average show, but the next hit series” (PMCDEED). This would fall under the
decision analytics because it was decision Netflix made to make original content for their
customers.

Descriptive analytics organizes data in a way that is simple to understand and digest. An
example of descriptive analytics includes categorizing customers based on information such as
the bank they use to make purchases and their preference of payment method. “Netflix records
a wealth of customer data: every pause and play; every fast forward and rewind; user ratings; text
analyses on searches and reviews; even what shows were watched, at what times and on what
devices” (PMCDEED). By collecting and analyzing this data, Netflix would be able to figure out
categories for their customers and be able to figure out what is most watched. In addition, by
collecting this data, Netflix can customize suggested shows based on the individual data. For
example, my cousin watches a lot of horror films, so on her Netflix account after she finishes one
movie it will come up with suggested movies similar to what she just watched. In an article,
Jenny McCabe (the director of Global Media Relations) states, “We always use our in depth
knowledge (aka analytics and data) about what our members love to watch to decide what’s
available on Netflix, if you keep watching we’ll keep adding more of what you love” (Bulygo).

Predictive analytics uses past data to predict future outcomes. “Netflix turned to their
customer data to draw actionable insights for their new show” (PMCDEED). For example,
Netflix uses their customer data information to carefully select actors and producers for their
original shows. By collecting data from popular shows amongst their customers, they can create
successful original shows that they know their customers will watch. In addition, an article
states, “If you’re watching a series like Arrested Development, Netflix is able to see the
‘completion rate’ of users” (Bulygo). For example, if the employees of Netflix would ask
themselves how many customers started the show at season one finished the series at the end of
season three (Bulygo). By using this information, Netflix could make the decision to continue the
show if enough customers watch the entire series. On the contrary, if the show was not watched
completely by a large number of customers then Netflix could make the decision to cancel the
show.

Prescriptive analytics not only predicts future behavior, but in addition provides reasons
for why that behavior might occur. The data that Netflix records such as text analyses on
searches and what shows were watched, would allow Netflix to figure out what their customers
watch most which would lead Netflix to knowing what behaviors their customers will have in the
future. In addition, as the example with Arrested Development states that Netflix could continue
the show if enough customers watched the complete available series or they could cancel the
show based on the number of customers that watched it. It would not be cost effective for Netflix
to continue a show if not enough customers are watching it. Netflix uses the number of
customers who watch a show to determine if it should be cancelled or continued.

Enterprise decision management combines all of the analytic methods in order to make
informed decisions on various problems and marketing strategies. Netflix was one of the first
streaming companies to create original content. This was a great marketing strategy because
Netflix challenged their creative team and was able to create original shows they knew their
customers would watch based on the data they collected. In addition, in an article it states, “…
company again turned to their data to effectively market and advertise the new series. Show
promotions were tailored to each individual viewer: which characters were shown, the themes,
that were expressed, even the color palettes, were all matched with data indicated would resonate
with specific viewer” (PMCDEED).

In conclusion, Netflix started out as a mail order DVD company and made the decision to
become a streaming company, which led them to creating their own original content for their
customers. The data which is collected by Netflix allows them to categorize their customers
based on their behaviors such as text analyses on searches, shows watched, and what devices are
used. In addition, Netflix uses the data collected to carefully select actors and producers in their
original shows and trailers to the shows are tailored to the individual viewer.
 Bibliography

Bulygo, Zach. “How Netflix Uses Analytics to Select Movies, Create Content, and Make
Multimillion Dollar Decisions”. 1 September 2021. https://neilpatel.com/blog/how-netflix-uses-
analytics/

PMCDEED. “Making Smarter Business Decisions With Big Data: A Netflix Case Study”.
Education Development Center. 17 March 2016. 1 September 2021.

“Netflix: Using Big Data to Drive Big Engagement”. Teradata. 1 September 2021.