When it comes to personalized recommendations, Netflix is a well-known player. Browse to Netflix and the first thing you see at the homepage is content adjusted to your interests, preferences and previously watched series and movies. The banner, carousels, the order of the shows, the text and the search: everything is personalized. These “recommendations for you” are not something new or special as you might think. Indeed, Netflix is not the only one who made personalization an important part of their business strategy. However, Netflix has recently stepped up their game when it comes to personalization.
By the end of 2018, Netflix announced that viewers will be able to choose the next storyline in an episode of a TV show or movie. On December 28th, Netflix released a 90-minute episode of Black Mirror: Bandersnatch. During different moments in the movie, the viewers get to decide how the story will continue. Is this the new innovative idea when it comes to customer experience and personalization?
Netflix as a well-known player in the market
Netflix is one of the first companies that saw the potential of streaming technology. Since 2007, when the company started with a subscription video-on-demand model, the service has reached over 130 million users in 2018 (Statista, 2019). According to Gomez-Uribe & Hunt (2015) an important aspect of the service of Netflix is the recommender system. Through the recommendation systems the users of Netflix can easily find videos to watch in every session.
Gorgoglione et al. (2019) argue that recommender systems are of strategic importance for online businesses. Recommendation systems refer to “web-based tools that tailor vendor’s offerings to consumers according to their preferences” (Li & Karahanna, 2015). The value of this personalized offerings can be seen in the fact that 80% of hours streamed by the customers of Netflix are determined by their recommendation algorithms (Gorgoglione et al., 2019). Since there are several kinds of recommendation engines with different performance metrics such as accuracy, novelty, diversity and trust, Netflix tries to search for the best algorithm (Gorgoglione et al., 2019. Next to this, Netflix is trying to handle issues related to the increasing number of customers and especially how to handle enormous stream of big data.
A new interactive viewing experience
One of the ideas Netflix recently incorporated, is thus a new interactive viewing experience for the users of Netflix. As this idea is not completely new and Netflix already offered this experience with children shows, the movie “Bandersnatch” is the first interactive show for adult viewers ánd the first big success within this format. Bandersnatch is a 90-minute episode of the Netflix series Black Mirror. Black Mirror is known for its critical commentary on technological developments and its impact on culture and society. In Bandersnatch, the viewers guide the protagonist Stefan through the episode by making a series of decisions (Ralph, 2019). These decisions influence Stefan’s life, experiences and mental state and result in different endings. The decisions that the viewers need to make differ from choosing between what Stefan has to eat for breakfast (Frosted Flake or Cheerios) or whether he has to jump off a balcony (Ralph, 2019).
What is the value for Netflix?
What is interesting about this business model is that this form of interactive experience offers new data insights for companies such as Netflix. According to Damiani (2019), Netflix uses the gathered data from the user participation to create an internal programmatic marketing infrastructure. Since the viewers need to make real-life decisions about for example their product preference (such as the choice between the cereals), musical taste and engagement with human behavior, an individual personalized pattern can be discovered. Moreover, how users handle certain decisions (for example if Stefan has to jump off the balcony) offer insight about what the viewers want out of a story and what they want to see the characters in a story do (Damiani, 2019).
By analyzing this data, Netflix could even better personalize the content, but also associate products with specific content or demographics. An example that Damiani (2019) mentions is that the frosted flakes cereals could be associated with, for example, 18 to 24 years old men. This way, effective targeted advertising could take place. Another interesting part of the business model is that Netflix could work together with different brands to test their product designs. Think of the already described example of the breakfast cereal boxes as shown to the viewer with two different box covers.
What’s in it for the customer?
But what is the efficiency of the business model? What is the value for the customer? First of all, the experiences of the series are tailored to the needs and interests of the customer. Each customer has an individual and unique experience as they have to choose between different narratives. Moreover, it is interesting that in the example of Bandersnatch, the customer experiences a sense of power and control. Research have shown that increasing user experience increases user’s confidence in their ability to perform their tasks (Nysveen & Pedersen, 2004). By choosing between different options and determining how the story will unfold, the customers are in charge and can make the choices for themselves.
It is interesting that the joint profitability of this business model is visible to both the customer and Netflix. With the interactive experience and thus through active customer participation and engagement, Netflix tries to uncover the hidden needs of the customers. As a result, Netflix can use this creative potential of their customers in new product and service development (Saarijärv et al., 2013). What is striking is that Netflix in fact guides the customers through different predefined choices creating the ‘illusion of free choice” (Ralph, 2019). Customers get the feeling that they are in control in the sense that they can literally determine whát and how they experience the content. Moreover, customers engage in personalized and unique experiences and eventually receive more content tailored to their preferences. Thus, through active customer participation the customers and Netflix together create greater value. However, the future will tell if this idea will pull off and will be long-lasting.
Damiani, J. (2019). Black Mirror: Bandersnatch could become Netflix’s secret marketing weapon. Retrieved 23-02-2019 from https://www.theverge.com/2019/1/2/18165182/black-mirror-bandersnatch-netflix-interactive-strategy-marketing.
Gomez-Uribe, C., & Hunt, N. (2015). The Netflix Recommender System: Algorithms, Business Value, and Innovation. ACM Transactions on Management Information Systems, 6(4).
Gorgoglione, M., Panniello, U., & Tuzhilin, A. (2019). Recommendation strategies in personalized applications. Information & Management.
Li, S., & Karahanna, E. (2015). Online recommendation systems in a B2C E-commerce context: a review and future directions. Journal of the Association for Information Systems, 16(2), 72-107.
Nysveen, H., & Pedersen, P. (2004). An exploratory study of customers’ perception of company web sites offering various interactive applications: moderating effects of customers’ Internet experience. Decision Support Systems, 37(1), 137-150.
Ralph, A. (2019). What Black Mirror: Bandersnatch teaches us about personalization. Retrieved 23-02-2019 from https://www.heyday.ai/what-black-mirror-bandersnatch-teaches-us-about-personalization/.
Saarijärvi, H., Kannan, P., & Kuusela, H. (2013). Value co‐creation: theoretical approaches and practical implications. European Business Review, 25(1), 6-19.
Statista. (2019). Retrieved 23-02-2019 from https://www.statista.com/topics/842/netflix/.