Netflix and Its Numbers

/ Jun 14, 2013

netflix

If we can agree on one thing about the web original content world, it’s this — it is young, and we don’t know what works yet. This means that when a company finds success in some fashion, it’s worth paying attention to what repercussions it might have on the rest of the industry.

Today’s point of discussion: Netflix, which has become genuinely disruptive to the previously-understood standards of film and television business models via a strategy that seems simple on the surface: Give its customers what they want, as soon as they want it.

But part of that deal is the fact that they can redefine the very terms by which their business is measured. Unlike so many other companies providing content to either traditional or digital spaces, Netflix has a firm lockdown on its numbers — who watches how much and when. There aren’t even charts tracking the most popular films and TV shows, the way Hulu does. As far as Netflix is concerned, all its data is need-to-know, and you don’t really need to know.

This is because of Netflix’s love of big data and algorithms driving discovery. To look at the site’s welcome page is to be reminded that they want to personalize results for you — part of why a recent announcement to create personal profiles for individual users is so important to their infrastructure.

However, what’s almost as interesting as the data Netflix doesn’t reveal is the data it does reveal. And I’m not just talking about subscribers, the number of which it reports at the end of every quarter.

In general, the data Netflix chooses to disclose tends to be data that supports the basic principles of how they want people to consume content.

Take, for instance, binge-viewing: Last fall, Netflix revealed that the day before the fifth season of “Breaking Bad” premiered laste summer, 50,000 subscribers watched the entirety of “Breaking Bad” season four.

(It probably helps that it was a Saturday.)

You might interpret that as 50,000 views — but it’s 50,000 people watching 13 hours of Netflix programming. Which would be huge… If it were ad-supported.

Instead, Netflix is making its money through subscriptions, which is the crux of the situation — that’s the only number they need to report to its shareholders, and thus it’s the only number they report.

Thinking long-term, one major ramification of the Netflix strategy is that other companies may adopt it. For example, public disclosure of numbers is key to the YouTube ecosystem — you can look at any channel on the site and know just how successful it’s been in both racking up views and building an audience of subscribers.

But while their upcoming paid subscription offering isn’t something that every YouTube creator will engage with, the fact is there’s no incentive for YouTube to publish numbers on how many people watch those channels. In those cases, the real metric that matters is subscribers — so there’s no reason for them to publish real stats on how content is performing. Especially because there’s no industry-standard Nielsen rating system for web video yet.

Netflix is under no obligation to share its numbers. But if Netflix’s lack of interest in openly providing metrics infects the rest of the web video world, it would run counter to everything that’s helped build the industry: Open reporting of data, and an understanding of what’s actually proving popular.

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