Behind-the-Scenes at Netflix: More Content, More Viewers, More Revenue

A new deep-dive into the current state of TV-movie industry giant Netflix has revealed a few interesting bits regarding the streaming company and its rapid growth.

Over the years, Netflix has been the subject of a combination of ridicule, fascination, and fear in Hollywood. The streaming giant’s mysterious, data-driven programming decisions seemed to many to be out of place in the entertainment world.

A new report from Vulture gives readers a behind-the-scenes look at just how the company works, and here are some of our most interesting takeaways.

After shifting from a DVD-mail-out company to a streaming platform, a lot of Netflix’s success came from its first original seriesHouse of Cards. The Washington political thriller was the first of its kind, Netflix’s first investment in a series right off the bat. By ordering a full season and releasing it all at once, Netflix managed to kick off an era of binge-watching that has since come to define much of its viewing model.

Another interesting takeaway is the fact that the streaming service doesn’t use data in the same way television networks use data. Although Netflix’s chief content officer Ted Sarandos says that the company bases series renewal and purchase choices on “70 percent gut and 30 percent data,” it also relies heavily on its proprietary “algorithms” in its decision-making processes.

“We have a saying: Your Netflix is not my Netflix,” says Olivia De Carlo, a director on Netflix’s originals product launch strategy team, noting that taste communities aren’t some static construct, either. “Most people are usually members of a few different communities. We’re complex beings, we’re in different moods at different times.”

Additionally, Netflix organizes users into “clusters,” or smaller “niche” groups to identify different interests and tastes. “Instead of grouping members by age or race or even what country they live in, Netflix has tracked viewing habits and identified almost 2,000 microclusters that each Netflix user falls into,” reads the report.

Instead of focusing on age, gender, and regional demographics, Netflix opts to look at more unique trends that exist in these “clusters,” because, as Sarandos says, “it’s just as likely that a 75-year-old man in Denmark likes Riverdale as my teenage kids.”

While Sarandos notes that more users are spending more time watching the streaming service than ever before, it’s still a small portion of the amount of time people spend on their TVs and smartphones.

“There’s tons of growth in user screen time on Netflix,” he says. “If you think about the addressable market for Netflix as being paid TV households, it’s relatively small. Everyone with a phone has a screen and access to the internet. That is our addressable market. The world’s taste, and the world’s time, is what we’re after.”

Check out the complete deep-dive into Netflix on Vulture.