Netflix CCO Ted Sarandos describes the company’s use of data

(l-r) SeriesFest CCO Kaily Smith Westbrook, Ted Sarandos CCO of Netflix, Mike Fries CEO of Liberty Global and Randi Kleiner CEO of SeriesFest at Sie FilmCenter on June 21, 2019. (SeriesFest)

DENVER — As an over-the-top video company, Netflix has access to enormous amounts of user data. But Netflix Chief Content Officer Ted Sarandos, speaking at the fifth annual SeriesFest in Denver this weekend, said the company uses data for a few strategic purposes, primarily to drive more viewership. And he gave more credence to the art of making a successful television series than to the science of creating a series based on data.

“We don’t collect your data,” said Sarandos. “I don’t know how old you are when you join Netflix. I don’t know if you’re black or white. We know your credit card, but that’s just for payment, and all that stuff is anonymized.”

But while Netflix may not collect data initially when its subscribers sign up, it certainly collects a lot of data about them as they watch, even if those subscribers are anonymous.

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For instance, Sarandos said that the thumbnail images for shows in Netflix’s search platform become customized for viewers based on what they have watched in the past. Each show has as many as 30 different thumbnail images. The images that get clicked on the most surface to the top and are then used more frequently. The images are also customized for viewers. For instance, a subscriber who watches The Crown and who also watches a lot of history programs will see a thumbnail image for The Crown of Winston Churchill, while other viewers will see different images.

Sarandos said, “We want to know your taste to give you good stuff to watch,” and he also bragged about Netflix’s search engine. “Everything gets found on Netflix. It’s the thing that gets floated to the top for you based on your likelihood [to watch] and personalization.”

Via its technology platform, Netflix has the ability to collect myriad data points for its 150 million subscribers, including the date and time people watch; the device used to watch; the location of the device; when a subscriber pauses, rewinds or fast-forwards; the ratings that a subscriber gives; and search history.

This data could be a gold mine for advertisers, but Netflix is holding steady on its pledge to not include advertising on its platform. Sarandos said, “Some things are just core to the proposition: ad-free and on-demand are core to the proposition. We think for us subscription is just a better way to monetize content.”

RELATED: Netflix will have to include ads eventually, rivals say

Although Netflix has access to tons of valuable data, Sarandos indicated that the data is primarily used to constantly refine search and recommendation so that subscribers watch more video. He stressed the importance of getting viewers to watch more Netflix content so that they find value in their subscriptions. This “value” is more important than accolades for Netflix. “The critic-piece is a nice to have,” said Sarandos. “The awards-piece is a nice to have.”

Art versus Science

Netflix is offering about 700 TV series and 80 movies in 2019. And it’s constantly on the hunt for new series content. The company is interested in major blockbusters as well as niche programs that satisfy smaller audiences.

Sarandos said data is somewhat helpful to size an investment in a particular series. But he said data is not that helpful when it comes to creating content. “Picking content and working with the creative community is a very human function,” he said. “Data doesn’t help you with that process. It does help you to size the investment. I really think it’s 70-80% art and 20-30% science in terms of the sizing.”

Earlier this month, Netflix debuted its original film Murder Mystery, starring Adam Sandler and Jennifer Aniston, and in a break from its usual pattern, Netflix claimed that more than 30 million Netflix accounts watched the movie during its first 3-day weekend. If the film had been in theaters it would have made more than $550 million based on a $9 ticket price.

Sarandos said the company hasn’t typically “done ratings or the equivalent” because “you end up with this concept of winners and losers.” But he said in this case “everyone is watching this movie and talking about it, and it’s at a time when American comedies are struggling. You want the greater community to know. It was good for the talent to know, too.” 

SeriesFest

Netflix spent about $13 billion on content in 2018, and Mike Fries, CEO of Liberty Global, who interviewed Sarandos at this weekend’s SeriesFest said Netflix will spend about $15 billion on content in 2019.

Events such as SeriesFest give companies like Netflix an opportunity to connect with independent writers and producers who are trying to garner attention for their serial programming. The event was held at the Sie Film Center in Denver, named after John Sie, the founder and chairman of the Starz Entertainment Group.

Although the movie industry has spawned about 9,000 film festivals, the series-based television industry has only begun to pick up on that trend. Sarandos said, “I’m sure festivals like this will become more the norm. This is the best time in the history of the medium to be a producer.” 

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