Everyone seems to “know” that Netflix “sells your data”. I am skeptical. First, no-one “sells your data”; smaller businesses might build statistical profiles and sell them, while larger businesses use the data to tailor ads for their platform.
So what data does Netflix get that everyone else doesn’t already have? Your watching habits. That’s not a whole lot of data frankly, and the only people who’d really want it are Netflix’s competitors. Netflix doesn’t do directly targeted ads either; their ad model, for now, seems to be paid product placements in their media, like their predecessors.
It seems more likely to me that the MPA and its partners are pressuring Netflix into enforcing restrictions, or that Netflix really does just want that $15/month. The latter, aggregated over potential payers, is not a small number. (Edit to add: Netflix uses statistics (which is called AI nowadays) to determine what shows to pick up. They would also want accurate data for their own forecasting purposes. This is actually part of the service Netflix provides.)
This is why they haven’t enforced it yet. It’s a trade-off, as you pointed out, and I’m completely sure that some data scientists have figured out where to draw the line to maximize profit or achieve whatever metric their bosses want.
I wouldn’t be surprised at all if they sell data to others (whether it’s anonymized or not) but it would be hard for me to believe that’s a huge portion of their overall revenue. An advertiser certainly may want data on your movie and tv watching preferences in order to better target you with ads, but after a certain point there would be rapidly diminishing returns. Once they have a relatively accurate profile of you (say, from 6 months or a year’s worth of movie/tv watching preferences) the additional marketing advantage they’d get from every additional month of data after that would be quite small. Probably not worth anything near the monthly Netflix subscription cost.
I wonder if Netflix would entertain the idea of “crowd” funding the continuation of a show?
I enjoy Lost In Space, but it has to cost them way more than other more drama oriented shows without all the effects and props. I wonder if anyone would bite if Netflix said alright based on our calculation season 3 needs a budget of $2 million and that would work out to about $10 for every person that has seen the previous seasons. Those are just random numbers, but I might pay $10 to make another season.
The subscription revenue is the short-term revenue source – it covers operational costs and keeps the lights on. It’s substantial, but so are Netflix’s day-to-day costs.
Selling aggregate big data, sliced and diced very specifically according to customer preferences, is the long-term business model. Those customers aren’t advertisers ( unless managment gets stupidly greedy I doubt we’ll see traditional ads on Netflix) but major consumer brands obsessed with cultural trends and where and with whom they resonate.
The other half of the data picture with Netflix is content tagging, which isn’t done simply to better customize a given profile’s recommendations. They’ve been paying people to tag content for years, and I’m sure the process has become increasingly granular and refined every quarter.
No that’s Hulu on the cheap tier. I pay for the no commercials just because my time is worth more than the price difference. A normal 1 hour show is 40ish mins without commercials or what feels like 75 mins with Hulu commercials. Not to mention the Hulu app does poorly with the commercial transitions.
I doubt the end goal is to really do away with sharing of accounts entirely. They and other streamers (particularly HBO) have already come out on splitting accounts across households as being a net good. It makes it more affordable for a lot of people and it’s an under sung selling point over a cable subscription.
I can’t split a cable subscription with my sister, for a long time we split a Netflix account.
The streaming industry has already pretty effectively dealt with the more extreme form of password sharing, when people hand out their accounts to dozens of friends and acquaintances. By capping the number of devices that can watch concurrently, and tiering subscription price based on that number.
I would imagine this is more about tamping down the people who fall into the gaps. They can’t really limit concurrent viewers, or price the better options out anymore than they do without impacting usability for single households. Or losing the savings angle on people splitting the cost. But just the practicalities of it leave enough space for more limited password sharing beyond a two or three way split. How often are you really gonna end up with 5 people watching concurrently if a college student throws mom’s password to 5 or 6 friends?
Or hell half of Ireland has my parents HBO login, time zones mean we never run into the limit.
The data is more valuable to Netflix internally because of the algorithm focus I mentioned above.
In fact Netflix probably buys your data. It’s not a company built on monetizing data, they charge you directly for content. But it’s absolutely a company built on using viewer data.
Incredibly granular data about how people watch what shows on the platform. How much of an episode, how many times it was watched. What was skipped. Were captions on. How many episodes were watched, by season. What other shows, and all that engagement data for that. Ages, demographics, locations, purportedly if anything else was running besides Netflix. What you browsed through to get to the the thing you did watch.
They aren’t targeting ads, or in the business of selling data. They apparently keep a tight lid on all of their internal numbers, including just viewership.
And they may not particularly care if you have a dog. It is however very important for them to know how many of their users in aggregate have dogs, how they feel about their dogs, what kind of dog, what sort of people have dogs etc.
So they can figure out how to push dog based programming to attract the lucrative dog market to their platform. And whether Bojack Horseman needs to have a pet, or competitive cooking shows need a dogfood episode. Or if it should be a dog or cat that eats it in their low cost John Wick nock off.
Netflix makes these decisions based on a seemingly bizarre series of metrics. Nothing as simple as what it costs vs what it brings in.
They’ve kept hundreds of shows no one has ever heard of in production just to bulk up some niche, and cancelled purportedly profitable, highly watched shows because they didn’t hit just the right algorithmic button. And they supposedly make both major and minor top level demands based on inscrutable data points.
Absolutely. Netflix’s data is more valuable to them than to third parties and the third parties it would be most valuable to are exactly the ones they wouldn’t sell to. Netflix is, however, expensive compared to its competitors. I rarely watch it so it’s very dear for me. I dropped down a scale when the pandemic hit assuming that the quality would be crunched by everyone pummelling the servers all the time.
One reason why Netflix historically tolerates account sharing is that sharing your password discourages discontinuation.
The only thing that would persuade me to subscribe would be a lower price. It may seem cheap to some, but $120 a year is a lot when you live below the poverty line.
I wonder if this could backfire for that purpose then? If people think the threat is around over-shared accounts, and those same people are naïve enough to think that multiple profiles are the way Netflix keeps tabs on account sharing (as opposed to IP, device, location, data-profile or other tracking), they might combine profiles to be “sneaky” and avoid the purge…
Product placement of lifestyle brands has been egregious in Hollywood for awhile. I haven’t heard of any examples with streaming, but I haven’t paid much attention.
It’s technically keeping the data internal, but it’s also technically selling ads.
I’m kinda curious what the ratio is of people who are leaching as a substitute for a full account and how many are, like my dad, just wanted to watch one show so he calls up his kid. I’m pretty sure if they kick him off my account he wouldn’t sign up in a million years.
That’s more of a funding model than ad sales or profit sector.
The deals and payments are made during pre-production and factor into the budget.
Everything you see that is not blocked out or genericised tends to be product placement.
It’s almost no one’s main revenue stream, the impact it has on that is usually in lowering the cost to produce. Streaming companies are known for being particularly heavy with it too. It’s not generally paid by the eyeball, or run time or time slot like ads are. A network or Netflix may not be involved, if it is an outside production company running the show
The exceptions are the sort of things you see with reality TV. Where the culinary competition show stops to extoll the virtues of whole food’s butcher counter.
Or the real housewives have a whole episode about a BMW.
Those seem to be sold as part of an ad package by the network.
It also tends to be a lot less targeted than typical online advertising. And since it’s paid upfront often before anything has released, placements are handled a lot different.
Even some famous examples. Like that show Chuck with Subway. Subway was literally paying a big chunk of the shows production budget. The significantly lower cost to NBC (I think it was NBC) made it worthwhile to keep the show on air. And Sunway paid NBC seperately (at by then lower rates due to ratings) to run ads concurrent.
Right, but previously those ads would be sold against the intended audience. Any customer data would have to go from Production Company → Network → Neilson and back. Neilson data about the audience is rather crude so national brands for broad shows make sense. The vertical integration means the ad buys can be more targetted and easier to negotiate using better data.
What I’m saying is they’re not for the most part ad buys.
What tends to happen is production company has the show, network gives us $X dollars per episode. But it costs $Y dollars. Where do we get the difference?
We need a computer for a lot of scenes. What computer company will give us money to get their logo up there? The show has not premiered yet, so whatever customer data there is is generic to the network, type of show, maybe IP license. The production company may not have compete access to it. There may be targeting involved for the sake of salesmanship. But much of that tends to be on Computer Company’s side. Microsoft says no because they don’t want their product portrayed that way, and doesn’t see the value in property with their demographics. Apple says yes, because Apple always says yes.
If the production company is making the show on it’s own, for sale to a network. Then the network itself might not be involved in this at all. If it’s an inhouse production of that network, or something commissioned by them. They may be heavily involved. But not necessarily on every single thing.
Any customer data would have to go from Production Company → Network → Neilson and back.
Neilson doesn’t just do the classic style set top boxes/surveys and broadcast/cable viewership numbers. They do an awful lot of market research, test screenings and the like of various sorts. And the Pathway generally goes Neilson → Network → Advertiser and Neilson → Advertiser → Network . Each end of it is paying Neilson for a different set of data and different kinds of research.
Production companies are not generally involved in ad sales. Nor are they neccisarily privy to the networks metrics beyond front line viewership numbers, where those have an impact on production/creative. It’s in the network setting dictates. You need to add a dog, more of that one guy, more tits.
Networks do their own significant data mining and market research. This is in fact what Neilson does, companies (and not just in entertainment) pay them to conduct research and crunch the data for them.
Netflix certainly seems to be of the opinion that their intense data situation can replace all of that, allowing them to do it in house. And they, along with the other streaming serves, certainly get more granular direct info from viewers.
Whether that saves any money or not depends on how much Netflix is spending to collect and analyze all of that. As to whether that’s a better way to do it? Netflix doesn’t sell ads. Product placement or not they’re spending billions on original content. And for all the world their platform looks increasingly like a mid-tier basic cable channel. By most reports they struggle to retain subscribers the last few years. Growth being driven by a turn and burn sorta situation.
I’ve been a netflix user since 2001 (also was doing the blockbuster DVD sub too). I’ve stuck with them through all these years because they had content that I wanted. That said, each price increase made me question if I still wanted it. I’m now paying ~$17 a month and will most likely cancel after the final season of Ozark. In the past 4 months I’ve only watched 1 show (about 2 weeks of viewing for me).
I find a lot of their shows are geared (and unpopular opinion here) to people interested in the high school demographic (looking at you stranger things, sex education…). I did enjoy Dark so I guess I make some exceptions.
Netflix doesn’t really offer any incentives for customer retention. I already subscribe to Hulu, starz, and prime and 9 times out of 10 I watch on those other platforms rather than netflix.
