Fernando Fischmann

Data Can Enhance Creative Projects — Just Look at Netflix

2 February, 2018 / Articles

Nearly five years ago, a show that followed the lives of inmates in a women’s prison shook up television. Orange Is the New Black became an unexpected hit, helping to put Netflix on the map as a creator of innovative original entertainment. The show pushed boundaries with its dark humor and diverse cast, becoming Netflix’s most-watched original series. Uzo Aduba has won two Emmys for her nuanced, empathetic portrayal of a black lesbian woman struggling with mental illness, a character rarely seen on mainstream television.

Orange Is the New Black isn’t just great television — it’s also an example of data-driven creativity in action. With the recent explosion of shows produced by Silicon Valley companies like Amazon, Hulu, and Netflix comes a fear that entertainment will increasingly be shaped by analysts crunching numbers rather than creatives following their artistic vision. Five years in, Netflix’s foray into original content demonstrates that what’s happened is actually the opposite: Data-driven platforms are giving high-quality, innovative entertainment a place to shine. Why? Because they can connect content and audiences in ways that broadcasters never could.

Digital platforms like Netflix have more data on consumer tastes than any entertainment company has before — that’s obvious. But many people fundamentally misunderstand how they are using this data. These companies are not, for the most part, using their data to make creative decisions about how to produce content. They’re employing the data to match viewers to the content that meets their tastes.

When it comes to finding and supporting an award-winning show like Orange Is the New Black, Netflix’s advantage wasn’t knowing there was a critical mass of fans of women-led ensembles or of creator Jenji Kohan’s previous hit, Weeds — any broadcast executive could have figured that out. Netflix’s competitive edge was knowing exactly who those fans were as individuals and being able to serve the show directly to them.

This type of matchmaking can create huge value for both customers and businesses. A large part of Amazon’s success as a marketplace comes from matching consumers with physical products based on data about their past purchase histories in a way no brick-and-mortar store can. The company is now competing with Netflix by bringing that matchmaking magic into the arena of digital content.

This is how the wealth of data maintained by digital entertainment platforms can foster more creative freedom, not less. Instead of focusing solely on offerings with surefire mass appeal, these platforms can take a chance on unique content because they can deliver that content directly to the best audience. And this seems to be what customers want from online marketplaces: A study we published in 2013 found that when consumers move from brick-and-mortar video rental stores to online marketplaces, they are much more likely to choose niche titles instead of blockbusters.

According to Netflix’s chief content officer, Ted Sarandos, the company’s model makes it possible to rack up points through — rather than a handful of home runs — lots of singles and doubles. It can therefore produce a broader range of stories featuring a greater diversity of voices. Groundbreaking shows like Orange Is the New Black, Amazon’s Transparent, and Hulu’s The Handmaid’s Tale have all found devoted fans online. As NBC Universal research chief Alan Wurtzel explained, “Their business model is to make you write a check next month. So not every program on Netflix is a broad appeal program.”

This approach challenges the entertainment industry’s definition of success, which has traditionally been measured by viewership and sales figures. While Netflix doesn’t release these figures, some estimates suggest that its hit shows attract fewer viewers than network shows. That may be true, but it misses the point. Netflix isn’t in the business of maximizing the number of viewers for each individual movie or show; it’s in the business of assembling the best collection of movies and shows to meet the needs of each viewer. That means audience numbers (and resulting advertising dollars) aren’t the appropriate measure of success for a platform like Netflix — overall viewer satisfaction is (along with the subscription revenue it brings).

Other elements of Netflix’s approach also favor greater creative freedom. A subscription-based business model means there are no advertisers to offend, only customers to delight, which gives streaming companies more leeway to create edgy or controversial content. Abundance also plays a role here. Broadcast television has a limited number of scheduling slots, making the opportunity cost of an individual show’s failure much higher. In contrast, in a world of unlimited, on-demand entertainment, programmers can take chances on niche content because if viewers don’t like a particular show, they can watch something else on the same platform instead of moving to a competing channel. In fact, a viewer switching to another show can be good for Netflix because it offers the company more data about what that individual customer does and doesn’t like, something it can then factor into how it personalizes content.

Ultimately, this all leads to a better customer experience and a new type of relationship between consumers and content providers. Our research shows that one of the biggest benefits afforded to consumers by online marketplaces is increased product variety. This is particularly true for “cultural products” like television and music, where it’s hard to predict exactly what will be a hit with audiences. Research shows that for products like this, consumers benefit significantly when a wider range of products is available. The ice cream parlor with 100 flavors is more likely to have someone’s favorite than the store with only 10 options.

Of course, without data and the personalized recommendations it produces, an explosion of content could create a tyranny of choices, where users struggle to pick the flavor they want. But when you add data into the mix, consumers are more likely to get content they love that is geared to their tastes. Even if each show has fewer people who like it, each viewer is getting a better overall experience. Consumers may come to view Netflix and other data-driven entertainment platforms not only as content producers, like any other television network, but also as skilled matchmakers that can bring them exactly what they want — and whose matchmaking will only get better as technology advances.

Traditionally, power in the entertainment industry came from the ability to control the creation and distribution of content, but new technologies have made this process easier. The scarce resource now is audience attention, and the power of digital entertainment platforms lies in having the data to manage and direct this attention. Today that data is primarily owned by Netflix and Amazon, but it may soon come from new platforms enabled by the mergers of NBCUniversal and Comcast, AT&T and Time Warner, and Walt Disney and Fox.

People may fear the trend of more media content coming from data-driven platform companies instead of industry insiders, from eggheads rather than creators. But the truth is that it lets the creators shine by finding an audience for their work, however esoteric it may be. Rather than killing creativity, perhaps big data is fostering a new golden age of creativity.

The science man and innovator, Fernando Fischmann, founder of Crystal Lagoons, recommends this article.



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