Netflix’s success isn’t really about algorithms

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We live in this algorithm-dominated world now, and part of the reason that emerged — aside from simply better technology and people focusing on it — was because for generations, a ton of big decisions were made on the gut of a few executives. This is probably nowhere more true than television and movies. People have been trying to figure out the “secret sauce” for a hit movie for decades — aside from “Try to put Will Smith in it” — and no one really knows how to do it, and famous screenwriters like William Goldman are out there saying absolutely no one has any idea how to do it. You see the same kind of stuff in retail: forever, decisions were made based on product/marketing/sales executives, right? But now there’s supposedly reams of “Big Data” about customer preference and behavior, and that Big Data — assuming anyone can use it — is supposed to make the whole process smarter. Jury’s still out on that, though.

Netflix is a company who now produces original media, and much of its success is often attributed to algorithms — that’s how it knows you might prefer a movie with a “Strong Female Lead,” for example — and even The New York Times has gone on record as saying that Netflix’s success is a major win for Big Data.

Thing is, though … maybe it’s not.

Here’s a good article on the topic. The same author, Tim Wu, also wrote this article a couple of years ago about how Netflix chose “fandom” (think fan boys and memes and all that) over “mass culture” (think Will Smith and Katniss).

When talking about Netflix now, Wu writes this (in this quote, Sarandos is the head of Netflix content, ostensibly):

I presented Sarandos with this theory at a Sundance panel called “How I Learned to Stop Worrying and Trust the Algorithm,” moderated by Jason Hirschhorn, formerly of MySpace. Sarandos, very agreeably, wobbled a bit. “It is important to know which data to ignore,” he conceded, before saying, at the end, “In practice, its probably a seventy-thirty mix.” But which is the seventy and which is the thirty? “Seventy is the data, and thirty is judgment,” he told me later. Then he paused, and said, “But the thirty needs to be on top, if that makes sense.”

Now think about this: probably the king of the algorithm world is Google. Without algorithms, Google wouldn’t put the right info in front of you, you’d stop using it, and they’d eventually be forced out of business. Instead, the opposite happens. But is their company all about algorithms? Good Lord no. They have tons of real, human people working here making sure the algorithm is working.

In sum, machines can do a lot — but there’s always some human touch still needed, somewhere in the process.

Now look at this idea as an explanation for Netflix’s success:

Perhaps what we are seeing here is better explained by the rise of a different kind of talent. It is a form of curation (at which Sarandos excels) whose aim is guessing not simply what will attract viewers but what will attract fans — people who will get excited enough to spread the word. Data may help, but what may matter more is a sense of what appeals to the hearts of obsessive people, and who can deliver that. And what that suggests is that competition will remain possible for companies that aren’t Amazon or Netflix, without massive piles of data on hand. It might be enough to know just which cults to bet on.

Think about some of the people Netflix has gotten in bed with:

  • David Fincher (House of Cards)
  • Ricky Gervais (Derek)
  • Mitchell Hurwitz (Arrested Development)

Those — and other examples — are guys with loyal, cult-ish followings in terms of content they produce. No one does the trailer better than David Fincher, for example.

So think about the big picture here:

  • Netflix might have more data on people’s habits than any company save for Google, Facebook, Amazon, and YouTube (part of Google, obviously)
  • Their success could come from that, yes.
  • It could also come from betting on the right people with the right rabid fan bases behind him.

And if that last bullet is true, then yes — it’s possible for a small dog to compete if they find a story and a way of telling it that resonates with others. The same thing applies to marketing.

My name’s Ted Bauer; I blog here regularly and you can learn about hiring me for freelance and contract gigs as well.

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