How Entertainment Companies Use Big Data

Your digital footprint is writing Hollywood’s next blockbuster

Back Bloomberg Jun 17, 2016 By Angus Whitley

As once-monolithic television audiences splinter and migrate to the internet, viewers have unwittingly turned the creative process upside down. Their social media posts, blogs and file downloads are telling streaming companies and producers what actors, writers and themes to weave together on-screen for the best chance of bottom-line success.

The prize is clear for entertainment companies ranging from  Netflix, which has more than 81 million subscribers in 190 countries, to Stan Entertainment, a startup battling the $42 billion Nasdaq-listed rival in Australia. Giving customers what they want — before they’ve even asked for it — increases the odds of a show’s success while forging loyalty for the content-provider, industry executives maintain.

“We’re trying to get a sense of what people are talking about, what’s trending and what’s relevant out there,” says Chris Oliver-Taylor, managing director of Matchbox Pictures, the Australian producer of “The Real Housewives of Melbourne” that’s owned by NBCUniversal Media.

“If the entire Twittersphere is talking about this particular thing, or if there’s a trend in this area and we create a piece of content that talks directly to it, then logic suggests that those people will engage with it,” Oliver-Taylor says.

The New York-based parent company’s leadership conference last year focused almost entirely on how to use big data, he says.

The evolution of home entertainment from free-to-air television to content streamed over the internet to multiple devices has facilitated greater insight into what, when and for how long customers are watching.

Whoever has the most data comes out on top, and the value of metadata will shift from content distribution to actual production, James Sullivan, a managing director of Asian equity research at JPMorgan Chase & Co., says in a report in March.

Still, there’s no consensus on the extent to which metadata should influence the entertainment business, he says. Sullivan, who is based in Singapore, recently traveled to North America, Europe and Asia to canvass the opinions of writers, entertainment lawyers, and executives from Google Inc. and Netflix on big data.

“The million-dollar question is whether you can build a plot around it,” Sullivan says in an interview. “Ultimately, I think the answer will be ‘yes,’ but it’s an incredibly controversial conversation. There have been clear creative concerns expressed to me, particularly by screenwriters.”

The entertainment industry is still figuring out how to gain maximum benefit from this high-level customer intelligence, says Matchbox’s Oliver-Taylor. Once it has, big-data driven shows will become commonplace, he says.

Knowing what elements could make for a great show isn’t enough to guarantee success, says Stan’s CEO Mike Sneesby. “It’s not always possible to match what the data says with the availability of projects. Sneesby was in Los Angeles last month for annual screenings by Hollywood studios of pilots and first episodes of upcoming shows.

Amazon.com Inc. says it releases pilots at Amazon Studios periodically for customers to watch and review. Their feedback is taken into account when executives decide which pilots will become a full series.

One product of that system is the comedy series “Transparent,” based on a Los Angeles family whose patriarch is transgender. Its debut in 2014 coincided with greater social awareness about transgender issues and was rewarded the following year with the Golden Globe for best TV series, musical or comedy. Star Jeffrey Tambor also won for best actor. (A representatives for Amazon was not available to discuss the role of big data).

Netflix, which distributes shows such as “House of Cards” and “Orange Is the New Black,” pioneered the use of mathematical equations to promote titles that a subscriber might enjoy. That’s based on variables such as previously downloaded content, the subscriber’s location and the show’s broader popularity.

A typical Netflix user may lose interest unless something interesting is found within 60 seconds, two employees of the Los Gatos, California-based company wrote in a paper published in a scholarly journal last year. Netflix’s system for coming up with personalized viewing recommendations helps save more than $1 billion a year by reducing the number of subscription cancellations, they wrote.