Netflix received 35 Oscar nominations today, the most of any distributor this year.
After gaining its first Oscar nomination in 2014 for the documentary “The Square,” Netflix has been gaining stride even bagging 24 nominations in 2020, more than any other traditional movie studio. Today’s announcement highlights how the streaming giant continues its successful formula.
What could be behind Netflix’s formula for success?
The streaming giant, famously known for investing in data analytics, has regularly pointed to its expertise in data-driven programming as a driver of its success. With its vast access to date to track when viewers start, stop, rewind, fast-forward, and pause videos, Netflix has developed the ability to leverage its data in creative ways. It’s flagship success, House of Cards, was purportedly based on analyzing data such as ratings and consumers’ viewing history. After triangulating that viewers who watched the original BBC production of House of Cards, also enjoyed watching films starring Kevin Spacey and films directed by David Fincher, Netflix gave the green light. Netflix replicated this strategy with The Crown, a historical drama portraying the reign of Queen Elizabeth II which was launched in 2016. Andy Harris, CEO of Left Bank Pictures which produced The Crown, recounted how Netflix had already analyzed audience data and were ready to move ahead before he could pitch it to them.
The Gut Instinct
And yet despite the prevalence and strategic use of data, the specific ways that the Netflix algorithm is leveraged in making programming decisions is largely black-boxed. While Netflix publicly states that its reliance on algorithms is what differentiates itself from other streaming companies, even Ted Sarandos co-CEO and Chief Content Officer, affirms that the company optimizes for the best shows informed by data-driven hunches. In other words, Netflix executives take the data available to them and make decisions about what television content to acquire based on their instincts.
While Sarandos has been the most outspoken proponent of data-driven programming, some have ventured that what drives Netflix’s sophisticated algorithm is Ted Sarandos himself. Specifically, Reed Hastings, Founder and Co-CEO of Netflix, has credited Sarandos for having the “golden gut.”
Indeed, there is a big difference between using data in combination with intuition and relying entirely on an algorithm. Media programmers like Sarandos, are still relevant as interpreters of cultural tastes and trends. ”Data is not the whole story”. explains Linda Ong, president and brand strategist for the online channel Truth TV to Advertising Age. ”Data tells you what, but it doesn’t tell you why.”
When it comes to making decisions, Sarandos describes how he uses data to size an audience for a show or movie, but ultimately, that “gut feeling” matters a lot too and that both should be used together. In practice, Sarandos concedes that his decision-making formula might consist of a 70/30 mix with 70% informed by data and 30% focused on judgement.
The Empowered Team
And yet, a successful business also relies on a good team. Rarely does it depend on the gut instincts of a few. It is understood that all VPs and most directors on Sarandos’ team have the power to green light projects, meaning they can approve House of Cards type deals without him. As Sarandos explained in a Television Academy interview, “Empowering people to make choices and hold them accountable has paid off for us [Netflix]. That’s the freedom or responsibility we talk about and it applies to greenlighting a show too.”
Empowerment also extends to the actors, writers and directors that create content under the Netflix umbrella. Explains Sarandos in an interview with The Independent, “I really do feel like our key role is picking the stories and the storytellers and then creating an environment for them to do their best work, but mostly stay out of their way. We collaborate, but it’s always an invited collaboration.”
Perhaps what lies behind Netflix’s content success is not only data or pure instinct, but that an entire team has mastered the skill of “informed intuition”-what Hastings describes as “starting with the data, but making the final call with the gut.” And that there is an cultural working environment that supports and fosters it.