Netflix and Grow: A look behind data driven companies

Charlie | November 23rd 2017

Netflix has grown from a good idea, a DVD-rental-by-mail service, to a multi-billion dollar company responsible for 37% of North America’s internet traffic. They have 109.25 million streaming subscribers, been nominated for 45 Emmy’s and their service is available in practically every country worldwide. The key to their success is their attitude to data. Everything from the personalised content suggestions to the way that they design the User Interface (UI) is driven by insights from data.

When you first land on the Netflix home page, machine learning algorithms are used to populate the user’s screen with the films and TV series that they are most likely to enjoy. Once they have the content that they think their user is most likely to enjoy they optimise even further. Using their data to create a profile of each user allows them to customise what sort of image to preview in order to maximise the chances of a user starting a show.

A key value to Netflix’s success is ‘experimentation not opinion’. This means that rather than simply deciding how their product works or looks on the whim of a manager, they analyse data to assess which option is best. An example of a technique used to drive their decisions by fact rather than opinion, is a data science method known as A/B testing. This is essentially running a controlled experiment on two variants of a product or algorithm. Using metrics to determine which option performed better allows them to prove a hypothesis, rather than just guess on what they think is best. This strategy enables Netflix to choose options that they know their customers prefer. This implemented in areas such as design, product functionality and streaming.

The advanced analytics has driven Netflix’s growth to huge levels. This useful analysis has allowed them to deliver their own original content to their customers with the safe knowledge that the shows will be successful. This has lead to smash hits such as Stranger Things, Narcos and Black Mirror. The intelligent use of machine learning and data science to drive decision making are keeping Netflix ahead of the game whilst producing millions of happy customers.

Image credit: Netflix