Netflix Streaming: The Other Story
When you think about it, the story of Netflix is rather remarkable. They slayed one industry, video rental stores. They no longer exist. Since Netflix began streaming their entertainment properties in 2007, cable TV companies have been struggling to stay relevant. Many millennials have never been cable customers, preferring streaming options like Netflix, and more and more existing cable customers are cutting the cord. Now, Netflix is in a pitched battle with the producers of movie and television entertainment. On February 1, 2013, Netflix premiered House of Cards to rave reviews and signaled their intent to become the first worldwide streaming network of original content, for both TV and cinematic films. Their powerful rivals in this battle are responding (In response to Netflix’ announcement of 600 hours of original programming in 2016, HBO announced 600 hours of their own.) and the outcome is still in doubt, but, if track record means anything, don’t bet against Netflix.
In each of these Netflix inspired industry revolutions, Netflix has had their finger on the pulse of consumer frustration. They understood how frustrating it was to do business with video stores; the inability to find movies that you would “really like”, the wasted expense when you didn’t get a chance to watch the movie you rented before it had to be returned, and the additional fees for returning the video late. Netflix had an answer for all of these DVD rental frustrations. Netflix understood the frustration of expensive cable bills that supported obscure channels that never got watched and responded with an internet alternative. And, now, Netflix is using all of the data they’ve collected that indicate what their customers enjoy watching and producing original content that their customers should enjoy watching.
So, how does all of this Netflix history impact our quest to find movies that we will “really like”? Put simply, the gold standard algorithm used by Netflix-DVD may be an endangered species. Netflix’ vision of creating a world wide streaming network filled with their own content is being successfully executed, with 75 million subscribers in 190 countries. Of those 75 million subscribers, only 5 million are DVD subscribers. While the DVD business contributes profit to the bottom line of Netflix, it is a part of its past, not its future.
As for the algorithm that Netflix offered $1 million to try to improve upon, it no longer fits into their plans. Its value to the DVD business is that it assists subscribers to find movies that they will “really like” and put them in a queue so that, even if the movies and shows you most want to watch are unavailable, the next DVD in the queue will be one that you will “really like”. On the streaming side, satisfying their customers requires a different strategy. Because of the cost to license movies and shows to stream, and because of the huge investment Netflix has made in original content, the library of entertainment that exists on Netflix is smaller. It was reported last week by Allflicks, a website that tracks what’s available to watch on Netflix, that in a little more than 2 years the number of shows and movies available to watch on Netflix has shrunk by 31.7%. The number of movies available to watch instantly went from 6,404 to 4,335 during that time. So if you go to streaming Netflix with a list of movies in mind that you will “really like” you are bound to be somewhat disappointed, and Netflix doesn’t want you to be disappointed.
Netflix is a data behemoth. Not only do they collect the ratings that you give to each movie, they know what movies you’ve browsed, when you browsed it, on what device you browsed it. They know if you started to watch a movie and stopped. From that data they have determined that if a typical viewer doesn’t find something to watch on Netflix within the first 5 minutes of browsing, they will go someplace else to find something to watch. They have created 76,897 unique ways to describe their content. They know which of those 76,897 will most appeal to you and organize them into rows of content and put them at the top of your list so that you will choose to watch one of their movies or shows available on Netflix. They even know to not show you heavy movies like Schindler’s List on a Wednesday night when you just get home from work. Yes, it is that creepy.
My recommendation is to use Netflix like any other home viewing entertainment option available. Know what you want to watch before you go there. If they have it, great. If not, go somewhere else to watch it.