The Los Gatos, California, company, based more than 300
miles away from Hollywood, frequently reaches into its technological toolbox
without viewers even realizing it. It often just uses few subtle twists on the
knobs of viewer recommendations to help keep its 270 million worldwide
subscribers satisfied at a time when most of its streaming rivals are seeing
waves of cancellations from inflation-weary subscribers.
Even when hit TV series like “The Crown” or “Bridgerton”
have wide appeal, Netflix still tries to cater to the divergent tastes of its
vast audience. One part of that recipe includes tailoring summaries and
trailers about its smorgasbord of shows to fit the personal interests of each
viewer.
So someone who likes romance might see a plot summary or
video trailer for “The Crown” highlighting the relationship between Princess
Diana and Charles, while another viewer more into political intrigue may be
shown a clip of Queen Elizabeth in a meeting with Margaret Thatcher.
For an Oscar-nominated film like “Nyad,” a lover of action
might see a trailer of the title character immersed in water during one of her
epic swims, while a comedy fan might see a lighthearted scene featuring some
amusing banter between the two stars, Annette Bening and Jodie Foster.
Netflix is able to pull off these variations through the
deep understanding of viewing habits it gleans from crunching the data from
subscribers’ histories with its service — including those of customers who
signed up in the late 1990s when the company launched with a DVD-by-mail
service that continued to operate until last September.
“It is a secret sauce for us, no doubt,” Eunice Kim,
Netflix’s chief product officer, said while discussing the nuances of the ways
Netflix tries to reel different viewers into watching different shows. “The
North Star we have every day is keep people engaged, but also make sure they
are incredibly satisfied with their viewing experiences.
As part of that effort, Netflix is rolling out a redesign of
the home page that greets subscribers when they are watching the streaming
service on a TV screen. The changes are meant to package all the information
that might appeal to a subscriber’s tastes In a more concise format to reduce
the “gymnastics with their eyes,” said Patrick Flemming, Netflix’s senior
director of member product.
What Netflix is doing with its previews may seem like a
small thing, but it can make a huge difference, especially as people looking to
save money start to winnow the number of streaming services they have.
Last year, video streaming services collectively suffered
about 140 million account cancellations, a 35% increase from 2022 and nearly
triple the volume in 2020, when the COVID-19 pandemic created a boom in demand
for entertainment from people corralled at home, according to numbers compiled
by the research firm Antenna.
Netflix doesn’t disclose its cancellation, or churn rate,
but last year its streaming service gained 30 million subscribers — marking its
second-biggest annual increase behind its own growth spurt during the 2020
pandemic lockdowns.
Part of last year’s subscription growth flowed from a
crackdown on viewers who had been freeloading off Netflix subscribers who
shared their account passwords. But the company is also benefiting from the
technological know-how that helps it to keep funneling shows to customers who
like them and make them think the service is worth the money, according to J.
Christopher Hamilton, an assistant professor of television, radio and film at
Syracuse University.
“What they have been doing is pretty ingenious and very,
very strategic,” Hamilton said. “They are definitely ahead of the legacy media
companies who are trying to do some of the same things but just don’t have the
level of sophistication, experience nor the history of the data in their
archives.”
Netflix’s nerdy heritage once was mocked by an entertainment
industry that looked down at the company’s geekdom.
“It’s a little bit like, is the Albanian army going to take
over the world?” former Time Warner CEO Jeff Bewkes said of Netflix during a
2010 interview after being asked about the threat Netflix posed at the time.
Not long after that put-down, Netflix began mining its
viewing data to figure out how to produce a slate of original programming that
would attract more subscribers — an ambitious expansion that forced Time Warner
(now rolled into Warner Bros. Discovery) and other long-established
entertainment companies such as Walt Disney Co. into a mad scramble to build
their own streaming services.
Although those expansions initially attracted hordes of
subscribers, they also resulted in massive losses that have resulted in
management shakeups and drastic cutbacks, including the abrupt closure of a CNN
streaming service.
What Netflix is doing with technology to retain subscribers
to boost its fortunes — the company’s profit rose 20% to $5.4 billion last year
— now is widening the divide with rival services still trying to stanch their
losses.
Disney’s 4-year-old streaming service recently became
profitable after an overhaul engineered by CEO Bob Iger, but he thinks more
work will be required to catch up with Netflix.
“We need to be at their level in terms of technology
capability,” Iger said at a conference earlier this year. “We’re now in the
process of creating and developing all of that technology, and obviously the
gold standard there is Netflix.”
Netflix isn’t going to help its rivals by divulging its
secrets, but the slicing and dicing generally starts with getting a grasp on
which viewers tend to gravitate to certain genres — the broad categories
include action, adventure, anime, fantasy, drama, horror, comedy, romance and
documentary — and then diving deeper from there.
In some instances, Netflix’s technology will even try to
divine a viewer’s mood at any given time by analyzing what titles are being
browsed or clicked on. In other instances, it’s relatively easy for the
technology to figure out how to make a film or TV series as appealing as
possible to specific viewers. If Netflix’s data shows a subscriber has watched
a lot of Hindi productions, it would be almost a no-brainer to feature clips of
Bollywood actress Alia Bhatt in a role she played in the U.S. film, “Heart of
Stone” instead of the movie’s lead actress, Gal Gadot.
“We want to do a really good job putting the things that you prefer in front of you,” Kim said. “Part of that is the content recommendations themselves, but it’s also about how we present the content to you.” AP