Netflix's Recipe for Success Includes 'Secret Sauce' Spiced with Silicon Valley Savvy

Although its video streaming service sparkles with a Hollywood sheen, Netflix still taps its roots in Silicon Valley to stay a step ahead of traditional TV and movie studios.
The Los Gatos, California, company, based more than 300 miles away from Hollywood, frequently reaches into its technological toolbox without viewers even realizing it. It often just uses few subtle twists on the knobs of viewer recommendations to help keep its 270 million worldwide subscribers satisfied at a time when most of its streaming rivals are seeing waves of cancellations from inflation-weary subscribers.
Even when hit TV series like “The Crown” or “Bridgerton” have wide appeal, Netflix still tries to cater to the divergent tastes of its vast audience. One part of that recipe includes tailoring summaries and trailers about its smorgasbord of shows to fit the personal interests of each viewer.
So someone who likes romance might see a plot summary or video trailer for “The Crown” highlighting the relationship between Princess Diana and Charles, while another viewer more into political intrigue may be shown a clip of Queen Elizabeth in a meeting with Margaret Thatcher.
For an Oscar-nominated film like “Nyad,” a lover of action might see a trailer of the title character immersed in water during one of her epic swims, while a comedy fan might see a lighthearted scene featuring some amusing banter between the two stars, Annette Bening and Jodie Foster.
Netflix is able to pull off these variations through the deep understanding of viewing habits it gleans from crunching the data from subscribers' histories with its service — including those of customers who signed up in the late 1990s when the company launched with a DVD-by-mail service that continued to operate until last September.
“It is a secret sauce for us, no doubt,” Eunice Kim, Netflix's chief product officer, said while discussing the nuances of the ways Netflix tries to reel different viewers into watching different shows. “The North Star we have every day is keep people engaged, but also make sure they are incredibly satisfied with their viewing experiences.”
As part of that effort, Netflix is rolling out a redesign of the home page that greets subscribers when they are watching the streaming service on a TV screen. The changes are meant to package all the information that might appeal to a subscriber's tastes in a more concise format to reduce the “gymnastics with their eyes,” said Patrick Flemming, Netflix's senior director of member product.
What Netflix is doing with its previews may seem like a small thing, but it can make a huge difference, especially as people looking to save money start to winnow the number of streaming services they have.
Last year, video streaming services collectively suffered about 140 million account cancellations, a 35% increase from 2022 and nearly triple the volume in 2020, when the COVID-19 pandemic created a boom in demand for entertainment from people corralled at home, according to numbers compiled by the research firm Antenna.
Netflix doesn't disclose its cancellation, or churn rate, but last year its streaming service gained 30 million subscribers — marking its second-biggest annual increase behind its own growth spurt during the 2020 pandemic lockdowns.
Part of last year's subscription growth flowed from a crackdown on viewers who had been freeloading off Netflix subscribers who shared their account passwords. But the company is also benefiting from the technological know-how that helps it to keep funneling shows to customers who like them and make them think the service is worth the money, according to J. Christopher Hamilton, an assistant professor of television, radio and film at Syracuse University.
“What they have been doing is pretty ingenious and very, very strategic,” Hamilton said. “They are definitely ahead of the legacy media companies who are trying to do some of the same things but just don’t have the level of sophistication, experience nor the history of the data in their archives.”
Netflix's nerdy heritage once was mocked by an entertainment industry that looked down at the company's geekdom.
"It’s a little bit like, is the Albanian army going to take over the world?” former Time Warner CEO Jeff Bewkes said of Netflix during a 2010 interview after being asked about the threat Netflix posed at the time.
Not long after that put-down, Netflix began mining its viewing data to figure out how to produce a slate of original programming that would attract more subscribers — an ambitious expansion that forced Time Warner (now rolled into Warner Bros. Discovery) and other long-established entertainment companies such as Walt Disney Co. into a mad scramble to build their own streaming services.
Although those expansions initially attracted hordes of subscribers, they also resulted in massive losses that have resulted in management shakeups and drastic cutbacks, including the abrupt closure of a CNN streaming service.
What Netflix is doing with technology to retain subscribers to boost its fortunes — the company's profit rose 20% to $5.4 billion last year — now is widening the divide with rival services still trying to stanch their losses.
Disney's 4-year-old streaming service recently became profitable after an overhaul engineered by CEO Bob Iger, but he thinks more work will be required to catch up with Netflix.
“We need to be at their level in terms of technology capability,” Iger said at a conference earlier this year. “We’re now in the process of creating and developing all of that technology, and obviously the gold standard there is Netflix.”
Netflix isn't going to help its rivals by divulging its secrets, but the slicing and dicing generally starts with getting a grasp on which viewers tend to gravitate to certain genres — the broad categories include action, adventure, anime, fantasy, drama, horror, comedy, romance and documentary — and then diving deeper from there.
In some instances, Netflix's technology will even try to divine a viewer's mood at any given time by analyzing what titles are being browsed or clicked on. In other instances, it's relatively easy for the technology to figure out how to make a film or TV series as appealing as possible to specific viewers. If Netflix's data shows a subscriber has watched a lot of Hindi productions, it would be almost a no-brainer to feature clips of Bollywood actress Alia Bhatt in a role she played in the U.S. film, “Heart of Stone” instead of the movie's lead actress, Gal Gadot.
“We want to do a really good job putting the things that you prefer in front of you,” Kim said. “Part of that is the content recommendations themselves, but it’s also about how we present the content to you.”

Meghann Fahy and Eve Hewson, two of the stars of Netflix's whodunit “The Perfect Couple,” have news for you if you want to call them breakouts: They've been working in this business for more than a decade.
Fahy made her TV debut in 2009 in an episode of “Gossip Girl.” Hewson's first big film role was in 2011's “This Must Be the Place.” They do concede, however, that it's recent TV roles — “The White Lotus” for Fahy and “Bad Sisters” for Hewson — that have led to new frontiers of opportunity, The Associated Press said.
Susanne Bier, who directed “The Perfect Couple,” says both Fahy and Hewson are “going to be big stars.”
“They certainly have proper, profound star quality, Both of them in very different ways,” Bier says. “Both are incredibly creative, incredibly smart, and also have a impressive insight as to who they are. You can be a great actor or actress and not necessarily really know who you are yourself. And they do.”
Hewson, 33, whose dad is U2 front man Bono, may have grown up in a famous family but she's now in demand in her own right. She will next be seen in a second season of “Bad Sisters, ” out in November. She's in Noah Baumbach's next film, alongside Adam Sandler, George Clooney and Riley Keough. She's also been cast in Steven Spielberg's next production and is set to star opposite Murray Bartlett in a racing series for Hulu.
Fahy, 34, is in production on a limited series with Julianne Moore and Milly Alcock called “Sirens,” written by Molly Smith Metzler (“Maid”) for Netflix. She also has two films in the can with Josh O'Connor (“The Crown,” “Challengers”) and Brandon Sklenar (“It Ends With Us”).
The two actors spoke candidly with The Associated Press about this phase of their careers. This interview has been condensed for clarity and brevity.
AP: You've both had popular, zeitgeisty TV shows in recent years. TV fans are particularly passionate. Have you experienced any interesting interactions with fans? HEWSON: It’s actually really fun to experience because even when we were in Cape Cod shooting “The Perfect Couple,” I would go to the local shop to get my groceries and little old ladies would follow me down the aisle and be like, “Excuse me. Are you that girl from that ‘Sisters’ show?” Who knew that they were watching it? It doesn’t change my life, so it doesn’t bother me, but when someone comes up to me and says that they love the show, especially when it’s someone unexpected, I’m like, “Oh, cool.”
FAHY: It’s not happening so much to me that it feels like a huge imposition or anything. I feel like I’ve been really lucky. A lot of the people that I’ve met who have been a fan of “The White Lotus,” or whatever, they’re really sweet people. And, I think, part of why we do this is because we want to tell stories that people can connect to and play out scenarios for themselves. So I think it’s always really nice.
AP: What's it like to now be a part of conversations about whom to watch? FAHY: Part of it feels really nice because you work really, really, really hard for a really long time — maybe that’s not how it happens for a lot of people — but I feel like we’ve both been doing this for a minute. So, of course, it feels really good. but I try not to like dwell on any of it. I try to acknowledge it and be like, “Oh, that’s so nice.” And then just kind of keep going.
HEWSON: You hear so many stories of people who were like, “I walked into my first audition and I just became a star.” Or, there’s this element of being an actor where people don’t want to tell you how hard they work. They want it to look like it’s really easy. But we've been doing this for a long time. People just don’t really tell those stories. It's usually about the one that was found on the street.
FAHY: Yeah. You took 15 years to become an overnight success.
AP: Do you notice you're now treated differently by people in the industry? FAHY: Yeah, but I always think that nobody ever knows who I am. It’s always very embarrassing. I embarrass myself in those moments. I don’t always feel like I fit in those rooms.
HEWSON: What’s nice is, I’ve spent so long going into a room and people just being like, “OK,” and act like they’re just not getting it. I know at least like I have work that people understand, what I’m doing a little bit more so they get me as an actor.
FAHY: It’s like a different level of respect.

Netflix's Recipe for Success Includes 'Secret Sauce' Spiced with Silicon Valley Savvy