I’ve argued in the past that Netflix will have the last laugh — that its success with content production will soon rival and surpass traditional TV networks and movie studios. Now I’m more convinced than ever.
Ironically, it’s a smear campaign spearheaded by NBC to undermine Netflix that has reinforced my opinion. NBC research guru Alan Wurtzel recently leaked data that indicated one of Netflix’s most-watched shows, Jessica Jones, averages only 4.8 million viewers per episode. By comparison, the most-watched series on traditional TV channels, such as Fox’s Empire and CBS’s Big Bang Theory, reach 9 million and 8.3 million viewers, respectively.
The purpose of leaking this data, of course, is to poke holes in the Netflix business model. But, as this BGR article points out, NBC is “delusional about Netflix and the future of TV.” I couldn’t agree more.
Why? Because, on an apples-to-apples basis, Netflix is outperforming the traditional TV networks. As this Concurrent Media blog post makes clear, Wurtzel’s misleading data neglects to mention that Netflix currently reaches 42 million U.S. subscribers, compared to the 116 million U.S. households that NBC, Fox, CBS and ABC reach.
So what? So this means a show like Jessica Jones is attracting an impressive 11.4 percent of Netflix’s total subscriber base, while shows like Empire and Big Bang Theory command just 7.8 percent and 7.2 percent of their networks’ total audience, respectively.
. . . .
Here’s another reason why Hollywood should be worried: Netflix is now able to leverage big data to produce hit shows almost routinely. This is a feat the networks have never been able to pull off. “Netflix has created a database of American cinematic predilections,” explains an enlightening article in The Atlantic. “The data can’t tell them how to make a TV show but it can tell them what they should be making. When they create a show like House of Cards, they aren’t guessing at what people want.”
How is Netflix getting it so right? By meticulously gathering and analyzing data on customer preferences, including not just what people watch but what they search for, what they like and even where they pause, rewind and fast forward. What’s more, Netflix has broken down its content into nearly 80,000 specific genres and subgenres — everything from Emotional Independent Dramas for Hopeless Romantics to Witty Dysfunctional-Family TV Animated Comedies. Yes, those are real categories.
When Netflix people create a new show, they’re not guessing and hoping. They know if they make a show in a certain genre with a certain type of director and certain types of actors, they will likely have a hit on their hands. Call it Moneyball for the movie and TV business.
Link to the rest at TechCrunch and thanks to Joshua, who says Amazon can do the same thing, for the tip.