Netflix Using Algorithms to Help Develop Original Content
Newsweek magazine has an in-depth article about Netflix in this week’s issue.
The article is specifically revolving around the company’s chief content officer Ted Sarandos. It’s titled “Ted Sarandos’ High-Stakes Gamble to Save Netflix,” with the subhead, “The chief content officer is placing the future of his company on a single high-stakes bet: original programming.”
It is an interesting read. I would recommend it if you are a Netflix-follower.
Among the parts of the article that I found most interesting included his professional history and his rationale for “gambling” on original content.
With the company still reeling, Sarandos’s original programming initiative is vital—a way for Netflix to both control costs and create exclusives that none of its competitors will ever be able to carry, drawing subscribers onto its rolls, and off of theirs. That’s why its shows need to be not just passable, but critically acclaimed.
“People keep saying, ‘Oh, you’re going to become like HBO?’?” Sarandos said over lunch in Las Vegas in April, before an event at which he unveiled the first footage from House of Cards. “I say, ‘No, no, no. HBO is going to become like Netflix.’ We just have to get really great at original before they get really great at all the stuff that we do.”
Another interesting passage, was when Sarandos explained that Netflix’s algorithms, fed with years of consumer preference data, will be used to help decide what TV shows the company invests in.
Netflix has proprietary algorithms that take in variables—actors, genre, box office, etc.—and spit out predictions for how a given title will fare in the Netflix library.
This same approach, he says, can be used for creating original shows. “We have built regression models that would, say, produce a risk profile of a show,” Sarandos says. “So, if the show comes out at the superhigh end like The Sopranos, it’ll perform like this, and if it’s just mediocre, it’ll perform like this. And the economics are along that glide path.”
So… like I said, it is an intersting read.