jQuery(document).ready(function($){ $('.spu-bg').click(function(e) { e.preventDefault(); return false; }); });

How SVOD Services Use Data to Make Decisions

Arising as a wonderful marriage of convenience and choice, subscription video on demand (SVOD) services have broken the monopoly once held by television. Using data, creativity and a healthy dose of innovation, SVOD providers have moved away from the fringes of entertainment and into the mainstream, with 54% American households having at least one subscription to a SVOD provider. Experts predict that it will soon be the norm for households to have multiple SVOD subscriptions. As the market expands, the competition for subscription dollars has become fierce, and the use of data has given many SVOD providers the edge they need over the competition.  

SVOD consumers will spend $18.7 billion on subscriptions in 2017, and this is expected to increase steadily in the coming years. In a wildly competitive marketplace, understanding what your viewers want to see is key to maintaining and growing subscriptions. Netflix’s latest acquisition of Millarworld and deal with legendary television producer and screenwriter Shonda Rhimes suggests that the way forward requires investing in original content. But how do these SVOD services make decisions on what types of content to offer, where to invest, and how to make decisions in an unprecedented market?

They assess mountains of data to make the smartest decisions possible.

What Kind of Data?

Predicting hit shows has become a science driven by algorithms. The 800 lb. gorilla of SVOD —  Netflix — doesn’t choose which movies and shows it offers at random. They rely on algorithms that mine their customers viewing habits and preferences. They know who watches what and for how long. Subscribers unwittingly yield such details, informing Netflix of whether they watch an entire episode, a full season, or an entire series that was originally broadcast over several seasons. Netflix even knows what devices are used to watch content and whether viewers accessed Netflix via mobile app or website.

In one infamous example, Netflix used data to plunge into the world of original programming and select a television show to debut as their first original series: House of Cards. Assessing usage data and metadata descriptions for the television shows on the network, Netflix was able to predict that House of Cards would be a success.

The amount of data that Netflix has available internally is a mystery, and until 2015 Netflix didn’t report on viewership like television networks do, but third party research can show trends in SVOD subscribership and even calculate the market shares of different services. For instance, observing 28,273 SVOD customers through our own ZQ Intelligence tool revealed that 59.8% of respondents used Netflix. Of those, 24.7% used the Netflix app and 35.1% used the Netflix website. Next in market share, Hulu captured 25.1% of the audience, with 4.7% of respondents using the Hulu app and 20.3% using the Hulu website. Market share goes down from there. For instance, Amazon Prime Video App captured 5.2% of market share, more than the Hulu app.

It’s clear that data collection and analysis is important to the top SVOD providers, and they’ve embraced it wholeheartedly, but the power of using data to make decisions isn’t just for the SVOD market. Businesses in all industries can take several lessons from SVOD providers about how to use data in research and decision making, and Luth has a specially designed research product for Streaming Video on Demand Services to collect and act on this data as well.

Lessons in Data from SVOD

Collect Internal Data

Your business is very likely sitting on a wealth of data right now — and, also very likely, it’s not being fully utilized. From Google Analytics to CRMs and even your email list, quantitative data about your business (and your consumers) is right at your fingertips. All you need to do is harness it, and use it productively.

With a purposeful process for data analysis, you can gain insights that drive your decision making thanks to the information sitting right at your fingertips.

Supplement with External Data

Even with a wealth of internal data, there are always going to be holes in the data you have — after all, you can only collect data on what your business is doing and how consumers interact with your business. If you’ve collected internal data diligently, and still have questions you need answered, working with an external data collection company can take you to the next level in analytics.

To get even more detailed insights, turn to external sources of data to complement your internal data. ZQ Intelligence provides external insights from passively tracked consumers. External data from a third party can provide you with information on how your competitors are doing, trends shaping your industry, and the behavior and habits of your target market.

Third party data collection not only adds information you couldn’t collect on your own, but the insights you glean from external data (such as market trends, or consumer habits) can guide you in how best to shape your own internal data tracking efforts. When combined, internal and external data can give you a full picture of how your business stacks up to the competition and whether your strategies are appropriately serving consumer needs and interests.

Don’t Let the Data Drive; Use Data to Guide You To Smart Decisions

Netflix’s decision to produce House of Cards was guided by data, but that doesn’t mean data alone made the decision (or made it a successful one). Joris Evers, Director of Global Corporate Communications admitted as much, when Netflix’s decision to buy the show because of data became scrutinized: “We don’t get super-involved on the creative side,” Mr. Evers said. “We hire the right people and give the freedom and budget to do good work.”

House of Cards had been pitched to Netflix as a possible show before they analyzed the data — instead of using data to create the ultimate best show as predicted by algorithms, Netflix used the data that they had to help them make a decision about which show to produce.

Data can be helpful and illuminating, and it should be used to help guide decisions; not single-handedly force decisions. That means the data shouldn’t sit in the driver’s seat when it comes to the health and prosperity of your business. You are in the driver’s seat, and the data helps to guide your path.

Category: Market Research, Video
Tags: Data, Netflix, SVOD

Download Our Newest Whitepaper

Luth Research