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Does Netflix, Inc. (NFLX) Pick Bets Using Only Big Data Or Ted Sarandos?

Does Netflix, Inc. (NASDAQ:NFLX) make its decisions about what content to acquire or make based only off of its analytics of its viewers’ tastes and habits or does the decision still come down to what its executive Ted Sarandos thinks?

According to The New Yorker’s Tim Wu, it’s a mix of using big data and the judgment of Netflix, Inc. (NASDAQ:NFLX)’s Chief Content Officer and other leaders.

Wu tells an interesting story from the Sundance Film Festival between the contrasts in reception to Netflix’s What Happened, Miss Simone? documentary and the privately-funded The Bronze film. The Bronze has seen tepid reception, to put it nicely, while Netflix, Inc. (NASDAQ:NFLX)’s documentary has garnered praises and respect.

It turns out the documentary about Nina Simone was made based off of insights provided by big data. Netflix, after all, has a wealth of data about what its subscribers watch, what they like, what they share, and even what parts of shows they watch they replay, as Wu notes.

Netflix, is NFLX a good stock to buy, big data, analytics, critics, curators, Tim Wu, Ted Sarandos,

This brings up the question whether analytics is now the main driver of what gets made by companies which have this data. Wu, however, believes that the ultimate decision is being made by humans still and he has asked Netflix, Inc. (NASDAQ:NFLX) Chief Content Officer Ted Sarandos directly at Sundance about this issue.

“‘It is important to know which data to ignore,’ he conceded, before saying, at the end, ‘In practice, its probably a seventy-thirty mix.’ But which is the seventy and which is the thirty? ‘Seventy is the data, and thirty is judgment,’ he told me later. Then he paused, and said, ‘But the thirty needs to be on top, if that makes sense.’” Wu writes.

So Netflix makes its decisions with humans in the mix, after all. However, these humans can perhaps be described as substantially better informed about what audiences will likely love and what they likely will ignore or get bored with.

“Perhaps what we are seeing here is better explained by the rise of a different kind of talent. It is a form of curation (at which Sarandos excels) whose aim is guessing not simply what will attract viewers but what will attract fans—people who will get excited enough to spread the word. Data may help, but what may matter more is a sense of what appeals to the hearts of obsessive people, and who can deliver that,” Wu concludes.

He says that this is actually good for companies which aren’t Netflix, or Amazon, which have rich troves of data about their subscriber base. “It might be enough to know just which cults to bet on,” Wu Writes.

Netflix, Inc. (NASDAQ:NFLX) shareholders includes Steve Cohen’s Point71 Asset Management which reported a massive 4,860% increase in its stake in the entertainment content distributor quarter over quarter, ending with ownership of 74,400 shares by the end of September.

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