Big Data: Netflix

Big Data has revolutionized and redefined the formulas to spike the profit margins of organizations.  This prompted organizations to invest heavily on efficient data harvesting systems, data information leveraging technologies and expertise.   Handling humongous amount of data comes with an ethical concern of privacy infringements. This is where General Data Protection Regulation (GDPR) comes to rescue.  (Van den Broek and van Veenstra, 2018) GDPR provides a framework of etiquette to be followed by those companies that are into data collection and data information leveraging processes.

Netflix, which had initially been a DVD mailing company, has eventually conquered the hearts of billions of binge watchers all over the world through its live streaming of movies.  It was in 2006 that Netflix flagged a competition offering 1 million dollars to the group that would create an algorithm for predicting the ratings that their customers would provide based on their previous rating.   This algorithm is still a key component of the current recommendation engine of Netflix.   Initially the data they had mainly consisted of four attributes namely – Customer ID, Movie ID, Rating and Date on which the movie was watched.  But as soon as they switched to live streaming, the nature of the data they collected changed.  This enabled Netflix to create models that would provide precise movie recommendations.   The outcome was millions of happy customers and a sharp rise in the number of subscribers. (Marr, 2016)

The data collected by Netflix consists of the time of movie watched, frequency of pausing and rewinding the video, time taken to choose movie, location of the viewer, delays caused due to buffering and bitrate, etc.

Another key factor where Netflix stands out is in the case of data governance.   In most of the organizations Directors have less knowledge regarding the Organization and Market compared to the executives in the organization and they meet only a few times annually. Netflix have a quite different approach in this case.  The board members meet more frequently than other organizations and their communication is structured into board memos, along with the supporting analysis and open access to all sorts of data information. This memo is prepared and shared among the top 90 executives and board members. This activity increases the transparency of data and information flow between management and Directors.  At the same time, it also ensures the fact that each hard decision made by the board is an outcome of deep and complete understanding of the Market and the Company, which the CEO of Netflix terms as” extreme duty of care”. (Larcker and Tayan, 2018)

Netflix supports TLS1.3(Transport Layer Security) protocol that provide secured connection between parties.  This helps in preserving users’ security and privacy.  It also helps in maintaining Authenticity, Confidentiality and Integrity of data exchanged through the channel.  (Choi, 2020)

Netflix collects information in 3 ways – information provided by the subscriber, information collected automatically and information collected from partner companies.  The Netflix Privacy policy ensures the use of the updated version of protocols to secure customer data and anonymizes and pseudonymizes data where needed. Despite these security measures, there are several instances where Netflix’s employees had breached the data security.  Many times, Netflix itself has been penalized for violating the privacy protection of their subscribers. (Reed, 2021)

References

S. Choi. The Netflix tech blog. URL https://netflixtechblog.com/how-netflix-brings

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D. F.  Larcker and B. Tayan.    Netflix approach to governance:   Genuine transparency with the board.  Rock Center for Corporate Governance at Stanford University Closer Look Series:  Topics, Issues and Controversies in Corporate Governance No. CGRP-71, Stanford University Graduate School of Business Research Paper, (18-24), 2018.

B. Marr.   Big data in practice:   how 45 successful companies used big data analytics to deliver extraordinary results.  John Wiley & Sons, 2016.

C.    Reed.            Netflix    data     breaches: full     timeline     through     2021.           URL

T. van den Broek and A. F. van Veenstra.  Governance of big data collaborations:  How to balance regulatory compliance and disruptive innovation.  Technological Forecasting and Social Change, 129:330–338, 2018.