Netflix has spun data into its blueprint, and which has resulted in outperformance compared to its competition. And the secret sauce of what has made Netflix a purpose brand is its sophisticated customer data collection and data analysis capabilities which has led Netflix to create its own ecosystem in a traditionally fragmented market of entertainment. Their strategy is to licenses content, distribute that content over their own platform, that content gets consumed, such that it can access and use consumer data to drive success.<\/p>\n\n\n\n
The ecosystem that Netflix has created is analogous to the network effects aspired by the platform solutions, the more customer you have the more data you gather and the more data you analyze, then AI and machine learning tools, allows you to improve your product with more and more input from the data and eventually that sidelines your competitors in the same way that businesses do with substantial network effects.<\/p>\n\n\n\n
Netflix uses this data to create a recommendation algorithm that users trust and also it helps tremendously to predict demand by providing more personalized offering to the customers based on their past choices. Netflix often cuts the deals with the content providers based on the data model that informs a combination of talent or cast and storyline and that influences the highest probability of success.<\/p>\n\n\n\n