Editor’s Note: This article was originally published in April 2019 and has been fully updated in November 2025 to reflect the most current statistics and industry trends.
Netflix is one of the most successful media companies in modern history, and its success is built on a foundation of big data and analytics.
With a company valuation of approximately $471 billion as of late 2025, Netflix’s market cap towers over many legacy media giants. Their success can be attributed to an impressive customer retention rate of approximately 98% (an industry-low churn rate of 2%), which is significantly higher than the streaming industry average.
However, it’s not just their ability to retain most of their 301 million+ paid members that has made them successful. Netflix has consistently outpaced competitors by making more successful TV shows and movies. Foundational hits like House of Cards and Orange Is The New Black, and more recent global phenomena like Squid Game and Wednesday, have garnered massive attention and high viewership, driving up the rate of subscriptions.
What is the secret to their success? Big data and analytics.
How Netflix Uses Big Data and Analytics
So, how does Netflix use data analytics? By collecting data from its hundreds of millions of subscribers and implementing sophisticated data analytics models to discover customer behaviour and viewing patterns. They use that information to recommend movies and TV shows based on their subscribers’ unique preferences.
According to various reports, over 80% of content streamed on Netflix is discovered via its recommendation system, which is estimated to drive over $1 billion in value annually from customer retention alone.
Netflix collects several data points to create a detailed profile of its subscribers. This profile is far more detailed than the personas created through conventional marketing.
Most significantly, Netflix collects customer interaction and response data for every piece of content. For example, Netflix knows:
- The time and date a user watched a show
- The device used
- Whether the show was paused, rewound, or fast-forwarded
- Whether a user finishes an entire TV show (and how long it takes)
- The rating content is given (thumbs up/thumbs down)
- The number of searches and the keywords used
With this data, Netflix can create a detailed profile of its users. To collect all this data and harness it into meaningful information, Netflix requires powerful data analytics.
More Than Just Recommendations
Netflix’s ability to collect and use data is the reason behind its staggering success, and it goes far beyond the recommendation engine.
Netflix also uses its big data and analytics tools to decide if they want to greenlight original content. To an outsider, it might look like Netflix is throwing cash at countless projects, but in reality, they greenlight original content based on thousands of data points derived from their user base.
For example, Netflix distributed Orange is the New Black knowing it would be a big hit. How? Because Weeds, the previous hit from the same creator, performed exceptionally well on Netflix in terms of viewership and engagement.
Netflix even uses big data and analytics to conduct custom marketing. To promote House of Cards, Netflix cut over ten different versions of the trailer. If you watched lots of TV shows centred on women, you received a trailer focused on the female characters. If you watched a lot of content from a specific director, you would have received a trailer that highlighted their involvement. This targeted approach means Netflix doesn’t have to waste time and resources on marketing – they already know who will be interested and what will incentivise them to tune in.
Key Takeaways
Powerful analytics models can process terabytes of data to churn out meaningful information. Judicious use of data analytics is the main reason for Netflix’s success. In fact, you may as well call them an analytics company that streams media, not the other way around.
Netflix’s success highlights the value of data analytics because it presents an incredible insight into users’ preferences, allowing them to make smart decisions that deliver maximum ROI.
The principles Netflix used – gaining deep insights from user data to drive strategy – are accessible to every organisation, and Selerity specialises in building the platforms that make it possible.
If you’re interested in big data analytics for your organisation, take a look at our Selerity BA solution. With it, you can access a cutting-edge, fully managed analytics environment that leverages the power of SAS.
To learn how Selerity can help you unlock the value in your data, just as Netflix does, contact our team for a consultation today.