In the Netflix Era, It's Data ー Not Content ー That's King

April 25, 2019

By Carlo Versano

A recent survey from the independent Streaming Observer found 8.7 million Netflix subscribers could leave the service in favor of Disney+ when it debuts later this year.

Jon Klein, the former CNN president who now runs Vilynx, an A.I. startup that seeks to make video searchable, isn't buying it.

Netflix's($NFLX) years-long head start in applying artificial intelligence to streaming content is so far ahead of any of its competitors or soon-to-be-competitors that it already knows the shows and movies that are going to keep its users glued to their screens ー even before they know it.

"Netflix's success has come from applying A.I. to deeply understand its content and the way it's being consumed," Klein said. So what Netflix already knows that Disney($DIS) doesn't is what other non-Disney programming Disney fans are likely to watch. And it will serve that content up to them before Disney has a chance to peel them away, Klein believes.

What's more likely, he said, as new streaming services debut ー from Disney, to WarnerMedia($T), to NBC($CMCSA) ー is that consumers will keep cutting the cord and use those savings to add more OTT services to their budget for monthly subscriptions.

Put another way: it's Netflix AND; not Netflix OR.

"Without A.I., any media company is flying blind," Klein said. "You cannot do battle without it."

The good news for legacy media giants just now entering the streaming wars, according to Klein, is that they can catch up (his firm Vilynx offers itself as source for media companies who want to add machine learning applications to their video offerings).

"There is plenty of time to arm yourself with data," Klein said.

"The whole battle for media from now forward is about data."

Netflix counts the lowest churn rate of any OTT service precisely because of its decade-long work in putting its tens of millions of users into thousands of "taste clusters." That way, it can surface and promote content that the algorithm is fairly certain a user would enjoy, based on the tastes of other users from the same cluster. While plenty of that seemingly endless pipeline of programming has been knocked for being of mediocre quality at best, "Netflix realizes quality is in the eye of the beholder," Klein said.

In the streaming era, the old media adage that "content is king" simply does not apply, Klein argues. It's now data that reins supreme.

For full interview click here.