Netflix, Inc. Reveals A Big Secret On How It Measures Success

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Netflix, Inc. (NASDAQ:NFLX) adopts a completely different methodology for evaluating the success of shows and movies than traditional TV networks or movie studios. TV giants rely on show or movie ratings to hawk space to advertisers, but Netflix is based on subscribers entirely.

“Valued hours” an important metric

The contribution a TV show or movie makes to Netflix’s ability to sign up and retain customers is the most important economic metric for the streaming firm. Measuring it is hard, and this is a major problem, Netflix Chief Product Officer Neil Hunt told Business Insider.

Hunt says the company uses a metric called “valued hours” to get close to measuring it. This is the main metric the streaming firm uses to judge success, and it is a variation of viewing hours. This is not just a tally of the number of the hours people spent watching Netflix, but it also takes into consideration the percentage of someone’s total viewing it represents.

In other words, if someone watches the show for too long then those hours are worth less to the streaming firm. This makes sense considering that a subscriber is the most vital unit to Netflix. Hypothetically, if a subset of subscribers watches just one particular show and despite that are willing to pay every month, then that show is very important to Netflix, says BI.

Though the company uses many metrics for its analysis, this one is the biggest single factor at which it looks, said Hunt. The concept of enjoyment or how much someone liked a show is another crucial factor the company is trying to nail down.

Better Call Saul Season 2 on Netflix soon?

In related news, the streaming firm just released season 1 of Better Call Saul, and the show is so popular that many have already binge-watched the whole series and are eager to know when the second season will be out. The second season has not premiered even on AMC as yet but is scheduled to premiere on the TV network on Feb. 15.

This means it will take a while before it hits Netflix, but an educated guess can be made regarding its release on the streaming platform. It seems that AMC and Netflix have some agreement under which previous seasons of AMC shows come to Netflix exactly two weeks before the release of the new season.

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