Netflix: Leveraging Big Data to Predict Entertainment Hits

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Case

Reference no. 913-006-1

Subject category: Knowledge, Information and Communication Systems Management

Authors: Debapratim Purkayastha (IBS Center for Management Research); Vijay Kumar Tangirala (IBS Center for Management Research)

Published by: IBS Center for Management Research

Published in: 2013

Length: 19 pages

Data source: Published sources

Topics: Big data; Predicting; Big data capabilities; Data mining; Business metrics; Performance; Viewing patterns; Data inventory; Algorithm; Product-attribute datasets; Netflix's basic ranking model; A/B testing; Software architecture; Cloud computing; Hadoop architecture

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Abstract

This case is about the big data capabilities developed by Netflix, the largest player in USA in video streaming services with a global streaming subscriber base of around 33 million. Netflix had complete details of the viewing patterns of each of its subscribers, including aspects such as when they hit the pause button and whether they switched off before the credits rolled. It had deployed this data to come up with recommendations for each of its subscribers. According to experts, Netflix's data mining competencies got a boost when the company shifted its information technology infrastructure to the cloud - this gave Netflix the flexibility to scale up - and had opted for the Hadoop architecture. Netflix also employed the huge dataset it had about the viewing patterns of its subscribers to get into original programming. It was so confident about the popularity of the original version of the television show 'House of Cards' and of the director and the lead actor of the show's remake among its subscribers, that it bought the exclusive licensing rights of the show's remake for US$100 million. The show, as predicted by Netflix's executives, proved to be a success. Netflix was to come up with more original content shows by relying on its assessments of the viewing patterns of each of its subscribers. The case also discusses some of the concerns that experts had about Netflix's big data technologies infringing on the privacy of its subscribers. Experts also raised concerns about the outages faced by Amazon Web Services, the vendor of cloud computing services to Netflix which had resulted in the latter's site being down three times. Industry observers were apprehensive that players such as Netflix would constrain artistic creativity by employing big data to come up with predictable content merely on the basis of the past viewing patterns of their audiences. This case is meant for MBA/MS students as a part of the Information Technology and Systems curriculum. It can also be used in a Marketing Research/ Strategy curriculum.