Business Analytics is a Big Deal, just ask Netflix

I would say that the importance of Business Analytics is partly due to the time in which we live in. Data is everywhere and there is constantly more being generated. For example, all the data in the world is doubling every 2 years and by 2020 we will reach 44 zettabytes (44 trillion gigabytes) of Data is being created faster than the methods in which to hold and manipulate the data are being developed. This is what has led to the concept of “Big Data“.

“We live in a data-driven world. Increasingly, the efficient operation of organizations across sectors relies on the effective use of vast amounts of data. Making sense of big data is a combination of organizations having the tools, skills and more importantly, the mindset to see data as the new “oil” fueling a company. Unfortunately, the technology has evolved faster than the workforce skills to make sense of it and organizations across sectors must adapt to this new reality or perish.” – Andreas Weigend, Ph.D Stanford, Head of the Social Data Lab at Stanford, former Chief Scientist, Amazon.com

This massive collection of data has presented businesses with a new opportunity to gather information which up until now has been untapped. By combining all this new data together and running analytics against it has provided some businesses with additional competitive value. This is just one of the use cases, I believe, business analytics are designed to achieve.

There was a Big Data Conference last Spring where many of the leading players such as Cloudera, Hortonworks, etc. presented on the value of leveraging data for decision making.  One of the presenters provided an example from Netflix’s creation of House of Cards that really resonated with the audience.

When thinking about the creation of a new series, Netflix turned to data and business analytics to help it make a decision.  Using its rich set of data, it knew that subscribers like to watch original series and will typically watch it all way to the end of the show.  In addition, viewers that watch original series also enjoyed the work of director David Fincher.  Finally, its data showed that viewers also liked Kevin Spacey as an actor.  Then, taking a huge leap of faith in its data, Netflix converged all the data points and invested $100M in the first two seasons of House of Cards.  The result is Netflix’s highest rated show.

In my opinion, this example shows the power of using business analytics to change or influence a business outcome and to gain a competitive advantage.  In this case, taking relatively unrelated data on original series, actors and directors and using it to make a big-time bet.  To their credit, it really worked out and I’m interested to see if other networks start using data in a similar manner (I am looking at you Hulu).