Netflix: Leveraging Big Data to Predict Entertainment Hits
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Big Data at Neteflix
Shift From Own Data Centers to Amazon Web Services
According to observers, Netflix's big data capabilities received a boost with the gradual shift, beginning in 2009, of the company's computing infrastructure from its own data centers to the cloud , by engaging the services of Amazon Web Services (AWS), the cloud computing subsidiary of Amazon . Netflix's search and recommendation engine and its streaming servers started utilizing AWS's cloud infrastructure. , The principal reason for Netflix's shift was that its pace of setting up data centers could not catch up with the increase in demand for its streaming services...
The Need for Original Content at Neteflix
Prior to March 2011, Netflix had had no plans of becoming the first avenue where a TV show or a movie was beamed. Rather, it concentrated on shows and movies having their second, third, or even fourth runs. In other words, Netflix dealt with content subsequent to its release either in theaters or on television. And occasionally, Netflix could lay its hands on content after it played in theaters and subsequently on television for quite a while...
Enter the 'House of Cards'
IDENTIFYING THE SHOW
How Neteflix Benefited from Big Data
According to industry observers, instead of creating shows based on viewers' response to trial episodes akin to the route taken by conventional stations, the video-streaming business enabled Netflix to assess the viewing patterns and choices of its subscribers. It was aware of what the subscribers viewed, the time at which they viewed the shows, and even when they paused to take a recess. By incorporating the data into an algorithm, it could forecast their tastes and what would keep them hooked....
Netflix was to debut four more original shows in 2013 including the shows “Hemlock Grove” and “Arrested Development”. The latter would be a remake of ‘Arrested Development', a popular television show. With Netflix tasting success with House of Cards, Amazon and Microsoft were quick off-the-block in announcing their entry into the creation of original content. Amazon was also funding, on a trial basis, six comedy shows...
Exhibit I: Netflix's Financial Performance (2005-2012)