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.”

Joanna Levesque shot to stardom at 13. Two decades later, “JoJo” — as she’s better known — has written a memoir and says the song responsible for her meteoric rise, “Leave (Get Out),” was foreign to her. In fact, she cried when her label told her they wanted to make it her first single.

Lyrics about a boy who treated her poorly were not relatable to the sixth grader who recorded the hit. And sonically, the pop sound was far away from the young prodigy's R&B and hip-hop comfort zone.

“I think that’s where the initial seed of confusion was planted within me, where I was like, 'Oh, you should trust other people over yourself because ... look at this. You trusted other people and look how big it paid off,’” she said in a recent interview with The Associated Press.

“Leave (Get Out)” went on to top the Billboard charts, making Levesque the youngest solo artist ever to have a No. 1 hit.

“I grew to love it. But initially, I just didn’t get it,” she said.

Much of Levesque’s experience with young pop stardom was similarly unpredictable or tumultuous, and she details those feelings in her new memoir, “Over the Influence.”

With “Leave (Get Out)” and her several other commercial hits like “Too Little Too Late” and “Baby It’s You,” Levesque’s formative years were spent in recording studios and tour buses. Still, she had a strong resonance with teens and young people, and her raw talent grabbed the attention of music fans of all ages.

“Sometimes, I don’t know what to say when people are like, ‘I grew up with you’ and I’m like, ‘We grew up together’ because I still am just a baby lady. But I feel really grateful to have this longevity and to still be here after all the crazy stuff that was going on,” she said.

Some of that “crazy stuff” Levesque is referring to is a years-long legal battle with her former record label. Blackground Records, which signed her as a 12-year-old, stalled the release of her third album and slowed down the trajectory of her blazing career.

Levesque said she knows, despite the hurdles and roadblocks the label and its executives put in her path, they shaped “what JoJo is."

“Even though there were things that were chaotic and frustrating and scary and not at all what I would have wanted to go through, I take the good and the bad,” she said.

Levesque felt like the executives and team she worked with at the label were family, describing them as her “father figures and my uncles and my brothers." “I love them, now, still, even though it didn’t work out,” she said.

With new music on the way, Levesque said she thinks the industry is headed in a direction that grants artists more freedom over their work and more of a voice in discussions about the direction of their careers. In 2018, she re-recorded her first two albums, which were not made available on streaming, to regain control of the rights. Three years later, Taylor Swift started doing the same.

“Things are changing and it’s crumbling — the old way of doing things,” she said. “I think it’s great. The structure of major labels still offers a lot, but at what cost?”

As she looks forward to the next chapter of her already veteran-level career, Levesque said it’s “refreshing” for her to see a new generation of young women in music who are defying the standards she felt she had to follow when she was coming up.

“'You have to be nice. You have to be acceptable in these ways. You have to play these politics of politeness.’ It’s just exhausting,” she said, “So many of us that grew up with that woven into the fabric of our beliefs burn out and crash and burn.”

It’s “healing” to see artists like Chappell Roan and Billie Eilish play by their own rules, she said.

In writing her memoir and tracing her life from the earliest childhood memories to today, Levesque said she’s “reclaiming ownership” over her life.

“My hope is that other people will read this, in my gross transparency sometimes in this book, and hopefully be inspired to carve their own path, whatever that looks like for them.”

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