How Netflix Prospers with Media Analytics

By: Sarah Angle

Netflix's strong analytical inclination allows them to produce a higher user retention rate than its competitors. 

In recent years Netflix has stunned the media industry. Valued at $164 billion in 2019, Netflix surpassed Disney as the most valued media company worldwide. The secret to its success was the impressive retention rate it received from its viewers. 

This success can be attributed to Netflix's ability to give users multiple programs that they would like to watch easily. Netflix has nearly perfected its user data analysis process. Not only does Netflix use specific data and algorithms to personalize each user page to what they will like, but also to figure out how to promote these shows or movies specifically to that individual. 

Netflix states that its user activity is over 75% based on the recommendations for personal preferences. This data is analyzed by collecting interactions and response information to predict future interactions. This is largely determined by how long a user watches a particular show or movie, if it was ever paused, how long it took for them to watch the entire series, whether or not they finished the series, etc. These interactions viewers have with their accounts can help Netflix determine the best way to shape the account towards that individual user and their interests.

This peaks users' happiness and interest with the platform and encourages them to return frequently because they have multiple programs that they are able to and would like to watch, giving Netflix a customer retention rate of 93%, which is much better compared to Netflix's competitors Hulu with 64% retention rate and Amazon Prime with a 75% retention rate. These platforms also make recommendations to their users, but Netflix has nearly perfected the practice, putting them ahead of its competitors. 

In fact Netflix is so confident in their user loyalty that they have recently raised their price to $17 a month. However, the data on user retention after past price increases shows that this move is unlikely to drastically affect their customer satisfaction and engagement.

As well as understanding and observing viewer interactions, Netflix also asks customers for their feedback so it can directly take into consideration what the audience wants and expects from this platform. Netflix continuously updates its site to increase customer satisfaction and engagement, therefore leading to an enormous success in customer retention. 

Netflix’s success with analytical analysis displays the benefits, and prosperity that can occur from accurate and useful data collection that can be used to assess the best next steps for the company. These marketing techniques can really make a difference in the experience for the user or customer. The better experience that customers have with the company or site the more likely they are to make a purchase and return to the site. This ensures continued success of a company, and Netflix has beautifully demonstrated the use of media analytics in its site.