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How Netflix content algorithms close the marketing gap

The arrival this week of Netflix in Australia and New Zealand will have long-lasting ramifications for the region’s cinemas, television companies and broadband internet providers.

Netflix, which allows subscribers to stream television shows, movies and other media content over the internet on their PCs or mobile devices, has been hugely successful in other markets.

The service was already available in some 50 countries before finally arriving in this part of the world, picking up almost 60 million users in the process.

“Many Aussies and Kiwis have heard a lot about Netflix over the years,” admitted Netflix CEO Reed Hastings in a statement announcing the move earlier this month.

Originally launched in the late 90s as a mail order DVD rental service, Netflix has since reinvented itself to become the world’s leading video-on-demand provider.

Recommendations that drive user behaviour

One of the really interesting aspects of the rise of Netflix has been the algorithms it uses to suggest content its subscribers might enjoy. Like other powerful internet brands, such as the e-commerce giant, Amazon, Netflix has been able to use algorithms to market successfully to its existing customers. Up to 75 per cent of what Netflix subscribers watch is said to be determined by algorithmic recommendations.

As content marketers know, if you can be smart about the related links or calls-to-action you display around your best content, you can keep visitors engaged on your website for much longer and guide them towards your most valuable pages.[pullQuote position=”right”]Up to 75 per cent of movies and television shows viewed on Netflix are recommended by its content algorithms[/pullQuote]

Netflix gets its revenue from relatively low monthly fees provided on a no-contract basis, so it lives or dies on its ability to keep subscribers watching. The algorithms that help users find the content they are most likely to want to watch play a crucial role in the company’s success.

As a result, developing new algorithms and improving existing algorithms are a huge part of what Netflix does. “We probably have 60 to 80 active algorithm projects at any given time, and within each, many variations,” Carlos Gomez Uribe, vice president of product innovation, told Forbes in an interview late last year.

As well as vast computing power, Netflix also has a strong human element to its algorithm development. Speaking to Wired Magazine in 2013, the company’s then engineering director, Xavier Amatriain, revealed that his team had freelance television and movie buffs “hand-tagging” content.

“We know what you played, searched for, or rated, as well as the time, date, and device,” he said in the same interview. “We even track user interactions such as browsing or scrolling behaviour. All that data is fed into several algorithms, each optimised for a different purpose.”

Making quality content popular

Watching a CGI-driven blockbuster on your iPad can hardly compete with the experience at your local iMax. But where Netflix has a real advantage is its ability to market lesser known films to the people most likely to enjoy watching them.[pullQuote position=”right”]Content algorithms can help users find content they would enjoy and share that they would otherwise never have known about[/pullQuote]

Clever algorithms give video-on-demand huge potential for independent films that lack the $100 million marketing budget of major Hollywood releases. If users trust these services to recommend great content, more people will see it who might otherwise never have known it had been created.

Netflix officially launched in Australia and New Zealand yesterday (March 24th). The number of available titles is significantly lower than in some other markets because it is reportedly still in negotiations over distribution rights.

Aussie and Kiwi subscribers will though have access to Netflix exclusives, such as season 3 of its marque political drama, House Of Cards.

All 13 episodes of the new season were released at once allowing fans of the show to engage in the increasingly popular practice of binge-watching, where they might get through an entire season of a show in just a few days.

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