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How Kevin Spacey Can Make You Rich
Who has more subscribers? Netflix or Comcast? Most people are shocked to learn that Netflix has more subscribers than friggin' Comcast, which is the largest communications company in the world. Netflix has 30 million subscribers. Comcast only has 23 million. Netflix has no infrastructure like Comcast. Comcast has 129,000 employees. Netflix has about 2,000. Yet Netflix has more subscribers. When Netflix was renting DVDs, they were the number one user of the U.S. Post Office. Now that Netflix offers streaming video, they are the number one user of bandwidth on the entire internet. How did they do all this? The answer: Data. Despite its comparatively small size, Netflix has data that Comcast only dreams about. If you're a Netflix subscriber, Netflix knows exactly what kinds of movies you watch, the actors you like the most, the subject matter you like best, and a host of other things you probably have never even considered. When Comcast or NBC or HBO creates a new TV show, it's a huge risk. It might work, it might not. When Netflix creates a new TV show, it's no risk at all. They already have the data on exactly what you like, so they can't lose. Here's the best example. You may have seen the new Kevin Spacey show called House of Cards. It's a good show. But what's more interesting is the reason why Netflix created that show. Like any other media company, Netflix wanted to create a show that a lot of people would watch so they could make money. Unlike other media companies, Netflix had the exact data on what people like. They observed that movies with Kevin Spacey were streamed or rented more than just about any other movie actor. They also noticed that people streamed or rented a lot of political thrillers. They didn't have to guess these things. The data told them. "Well hell," they said, "Why don't we make a political thriller TV series with Kevin Spacey in it?" So they just did that. The rest is history. House of Cards is a massive hit, it's won all kinds of awards, people love it, it's in negotiations for its third season, and it makes piles of money for Netflix. This is exactly why Netflix can take $2 billion and sink it into a bunch of new programs with almost zero risk. They don't experience the traditional risk of the big networks or of Hollywood. Ever notice how every other movie that's comes out of Hollywood these days is sequel, reboot, remake, spin-off, or rip-off of another idea? That's because Hollywood is risk-averse. Making a movie costs a lot of money, and if it doesn't work, they lose big. So they play it safe by recycling the same old crapola. Netflix doesn't have this problem. They have the data that tells them exactly what their customers like. Do YOU have the data you need in your business? Do you know exactly what your customers like or dislike? Are you guessing? Or do you have real data, with real numbers, that tell you this exactly? Where in your business can you gather the data needed to help you win big while simultaneously alleviating risk? Instead of being like the typical business that spends most of its time guessing as to what the market wants, structure your business to be as much like Netflix as possible. Gather the data. Then let the data guide you. Then make bank. Like Kevin Spacey.
This article was originally published on January 23, 2014