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With a 51 percent market share of the American streaming industry and over 148 million streaming subscribers worldwide as of Q4 2018, Netflix is certainly a force to be reckoned with.
More interestingly, Netflix is on track to be profitable. The chart below, courtesy of Statista, shows Netflix’s annual revenue from 2002 to 2018, and one thing is clear: Netflix is growing consistently and exponentially.
Unlike most other brands, Netflix’s growth is attributable more to content and user experience than to marketing, and this content is largely influenced by big data.
While many organizations have yet to effectively leverage data available to them, Netflix is a noteworthy exception.
Netflix is easily one of the most counter-intuitive companies out there. A huge example of Netflix’s counter-intuitive nature is shown through its decision to flat out block VPNs in 2016.
This is despite the fact that at the time, more than 30 million Netflix users lived in countries where Netflix’s service is unavailable without using a VPN or other location-masking services (and where Netflix is now recording most of its subscription gains).
The same year, Netflix hiked its prices and refused to back down despite protests from users and loss of hundreds of thousands of users.
Yet, Netflix has only grown since.
The following chart shows Netflix’s subscriber growth since it made its controversial decision to ban VPNs and hike its prices in 2016.
So how is Netflix able to continue rapid growth despite alienating a significant portion of its base? By leveraging big data to find out exactly what users want and giving it to them.
Netflix is betting big on content and user experience, the larger chunk of Netflix’s budget is spent on content. In 2019, Netflix is committing a $15 billion budget to content. For comparison, they are committing a meager $2.9 billion for marketing.
While it’s easy to focus on Netflix’s huge content budget, it would be a better idea to focus on the process used to come up with ideas for this content and how much of a role big data plays.
Netflix uses data processing software and traditional business intelligence tools such as Hadoop and Teradata, as well as its own open-source solutions such as Lipstick and Genie, to gather, store, and process massive amounts of information. These platforms influence its decisions on what content to create and promote to viewers.
Netflix doesn’t use a traditional data center-based Hadoop data warehouse. In order to allow it to store and process a rapidly increasing data set, it uses Amazon’s S3 to warehouse its data, allowing it to spin up multiple Hadoop clusters for different workloads accessing the same data. In the Hadoop ecosystem, it uses Hive for ad hoc queries and analytics and Pig for ETL (extract, transform, load), and algorithms.
It then created its own Genie project to help handle increasingly massive data volumes as it scales. All this points to one thing: Netflix is very particular about having a lot of data and being able to process this data to ensure it understands exactly what its users want.
The result has been nothing short of amazing. Netflix has been able to ensure a high engagement rate with its original content, such that 90 percent of Netflix users have engaged with its original content.
Netflix’s big data approach to content is so successful that, compared to the TV industry, where just 35 percent of shows are renewed past their first season, Netflix renews 93 percent of its original series.
One of the most oft-cited examples of Netflix’s use of big data to conceive successful content is the House of Cards TV series. For good reasons.
Some quick facts:
In fact, Netflix’s confidence in the success of House of Cards was such that an executive told GIGAOM in an interview that they didn’t need to spend millions to get people to tune into the program. They just knew people would watch it.
Due to the direct relationship Netflix has with its subscribers, as well as an abundance of data on how audience members interact with their content, the company could easily determine what kind of content people wanted.
In the case of House of Cards, by analyzing its data, Netflix realized that a significant percentage of its 33 million subscribers at the time had streamed director David Fincher’s work, The Social Network, from beginning to end on its platform, and that films featuring Kevin Spacey were always successful with its audience.
What’s more, Netflix’s data revealed that the British version of House of Cards on its platform was a hit. And that those who had watched the British version of House of Cards had also watched other films acted by Kevin Spacey or directed by David Fincher.
Relying on this data, Netflix concluded that an already successful show in Britain, starring much-liked actor Kevin Spacey and director David Fincher, for an American audience, will be a big hit.
Within three months of introducing House of Cards, Netflix added 2 million subscribers in the US and 1 million additional subscribers internationally.
This meant that an estimated $72 million was added to the company’s bottom line, nearly paying off its initial investment in the House of Cards show in mere months.
With a 93 percent renewal rate for its shows after the first season, the success of House of Cards isn’t an isolated incident. Other series like Orange Is The New Black, Arrested Development, and The Crown were introduced to acclaim using a similar process that relies on big data.
When it comes to gathering data, Netflix’s huge user base of over 148 million subscribers gives it a massive advantage. It then focuses on the following metrics:
Once data has been gathered, Netflix uses this data in a lot of ways. One of the most important uses is formulating and validating original programming ideas, as discussed in the above House of Cards example.
Arguably more significant is the manner in which Netflix has mastered effective use of data to get people to engage with its content.
Netflix is so good at targeted content promotion that an estimated 80 percent of content streamed on its platform is influenced by its recommendation system.
Without getting bored with the technicality, Netflix is clearly a great example of the power of big data. While you might not have the resources to create your own project for more big data efficiency like Netflix did by creating its Genie project, the big data industry is rapidly evolving and a lot of open source tools exist to help you collect and process the essential data to understand exactly what your users want.
By following Netflix’s example, it is possible to effectively leverage big data to enhance your content and user experience and ensure the growth of your business.
Gabrielle Sadeh is a Digital Marketing Consultant. She can be found on Twitter @GabrielleSadeh.
The post How Netflix uses big data to create content and enhance user experience appeared first on ClickZ.Reblogged 8 hours ago from www.clickz.com
Last week, these marketing technology companies got funding:
What it is
Silicon Valley-based Passbase has raised $600,000 in pre-seed funding thanks to seed fund investment from Upheavel Instrumetns and Seedcamp, as well as a group of business angel investors from Alphabet, Stanford, Kleiner Perkins, and EY.
The company is working on building what it has named an “identity engine” in order to simplify online identity verification.
Why it matters
With this extra funding, Passbase hopes to become a key player in the world of digital identity and privacy.
What it is
Photography startup Polarr has raised $11.5 million additional funding in Series A. Led by Threshold Ventures and supported by Pear Ventures and Cota Capital, the company’s total funding comes to around $13.5 million.
At the moment, the company is probably best known for its photography app for iOS and Android, which utilizes machine learning and AI to improve image editing. The company says it has around four million monthly active users.
Why it matters
Best known for its photography app for iOS and Android that uses machine learning and AI, claiming four million active monthly users, this new round of funding will go toward engineering, partnerships, and research and development.
What it is
San Francisco-based Noble.AI has raised a second round of seed funding from Belgium-based chemistry corporation, Solvay Ventures. Noble.AI uses big data and AI software to help companies with R&D, claiming at 10x lower cost. Though the funding amount is undisclosed, the startup has raised a total of $8.6 million to date.
Why it matters
This funding comes as corporate R&D spend is booming in the corporate world, but still lagging behind in the startup world. These investments point to a shift there.
What it is
Austin-based predictive AI analytics firm StoryFit, focusing on the publishing and entertainment industry, has raised $1.75 million in new funding led by Venture Capital from IndieGogo, Omaze, and Livefyre. Other investors include Bertelsmann Digital Media Investments, Ascend Venture Capital, angel investor Walt Winshall, Techstars, and Capital Factory.
Why it matters
This new round of funding will be used for new key hires and continued advancements in content-based analytics, including predictive technology, audience identification, and industry trends.
What it is
Adthena does “competitive intelligence through search.” Every day, they process more 10 terabytes of new data, and index 500 million ads and 200 million keywords in 15 different languages. They offer a number of products, mostly around brand protection, partner management, strategic planning, gap analysis, and ad copy analysis.
Last week, they announced $14 million Series A funding.
They already have more than 250 customers worldwide, including brands such as Autotrader, Air New Zealand, Atlassian, Citibank, Burberry, Toyota, and Volvo, as well as agencies such as GroupM.
Why it matters
Adthena stands out for its commitment to AI. They claim to be the only search platform powered by natural language processing (NLP).
PS — You might also be interested in the news-focused version of this roundup: Martech news roundup: Changes at Facebook, new Google Ads and Twitter tools, Facebook replacing relevance score
See something we missed? Leave us a comment below!
The post Martech funding roundup: Passbase, Polarr, Noble.AI, StoryFit, Adthena appeared first on ClickZ.Reblogged 22 hours ago from www.clickz.com
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