(This is the third part of a multi-part series exploring one specific Netflix number. To read the other pieces:
Okay, enough skepticism. If we take the latest datecdote from Netflix, at face value, what can we learn from it?
Well, to start, let’s take a look at the history of “80 million” in Netflix releases…
What other evidence of “suspicious” numbers do you have?
In a future article, I’ll write about another “theme” of this website called, “Theme X: Be Skeptical”. Especially with competitors. Don’t give them the benefit of the doubt!
One of the corollaries to that theme relates to data. The corollary is, “Be wary of large, rounded numbers.” Data isn’t often rounded so evenly. This applies to scientific studies, political causes and other social phenomena. Oh, and entertainment success stories.
I’d add, if the same company keeps repeating the same big number that would be weird, right?
Netflix has this problem with their original movies, and I don’t think anyone has pointed this out yet. Researching the “80 million customer accounts” I naturally googled to try to find every news source uncritically repeating this datecdote. Imagine my surprise when the first occurrence of 80 million accounts wasn’t October in the Q3 shareholder report, but actually in June!
See, their “Summer of Love” romantic comedies weren’t the first time they had “80 million customers” watch something. For example…
– In June, Dana Feldman on Forbes also reported that 80 million customers had watched a “romance film” on the service. Rereading it, this looks like it includes both originals and licensed films. This came from a Netflix tweet.
Clearly there was some rounding going on. And for press releases or on information provided on background, Netflix is under no obligation to be precise. But let’s assume the numbers are close enough. If the baseline assumption is all Netflix movies combined get 80 million customers accounts involved, the “Summer of Love” films didn’t really boost viewership that much did they? Either for romance films or original films. Eighty million customers is just what big groups of movies promoted by Netflix tend to get.
But if I wanted to be skeptical, I mean, what are the odds that exactly 80 million customers watched an original in from January to June, which is the same number that over the previous year watched a “romance movie” and then, after two more months of Netflix rom-coms being released in the “Summer of Love”, they had all in 80 million customers watch an original romantic comedy? Is that crazy overlap, or three part coincidence?
What if we take all the recurring 80 million customers at face value? What can we learn from this number?
We can triangulate the floor for Netflix “Monthly Active Users”.
This is the biggest way that streaming video distributors, social platforms and subscriptions services in general try to game the narrative. A customer or user includes anyone who “samples” a subscription. So you order from Blue Apron, or start a Hulu free trial, or sign up for SnapChat. Those are all users or customers.
But Monthly Active Users (MAUs) is a much better approximation of who is actually using your service regularly. (Or weekly or daily active users, which are even smaller time periods.) That means actual people you can monetize through ads or monthly billing. With Netflix, we have no clue what their monthly or weekly active users are. Most social platforms include this in their SEC filings. Netflix does not—it isn’t a social platform—and instead focuses on “subscribers”.