Netflix Thrives By Programming to ‘Taste Communities,’ Not Demographics

As Netflix continues to take over the TV industry—it now has 130 million subscribers in 190 countries, and will spend as much as $8 billion on original programing—the company says it has thrived by programming not to demographics but what it calls “taste communities.” “We found that demographics are not a good indicator of what people like to watch,” said Cindy Holland, vp of original series, today at the Television Critics Association’s summer press tour in Los Angeles. Instead, Netflix’s scientists have found that there are several connections among content types and what people like to watch, which goes “several layers deeper” than genres. They refer to these as “taste communities,” and have identified 2,000 of them. So instead of focusing on advertiser demos (since the service has no ads) or Netflix’s brand identity, it looks to these “taste communities.” “We program to suit their tastes, not mine,” said Holland. This approach “helps us identify like-minded fan communities,” she explained. When execs are deciding whether or not to order a new series, they determine whether they can aggregate enough of those taste communities “to justify the cost of a show.” The company has a slightly different approach to determine whether or not to renew one of its shows. “The biggest thing we look at is are we getting enough viewership to justify the cost of a series,” said Holland, who also looks at the fan community and social media impact. For that reason, Netflix hasn’t made a decision yet about a third season of its ’80s female wrestling comedy GLOW. “We would be really thrilled to make more, but I don’t have anything to share just yet,” she said. At its core, Netflix is about “access, personalization and choice,” said Holland, who joined the company 16 years ago. “Our job is to provide enough variety that our 130 million members find content they love and come back to us each month”—while also looking to attract “the next 130 million.” Holland disputed criticism from rivals that the service puts out too much content— "quality and quantity are not mutually exclusive”—and that it can’t give every series or movie the marketing push that it deserves. “The most powerful promotional platform we have is the Netflix service itself,” said Holland. While the service has 130 million subscribers, the company estimates that it actually has 300 million users. That is supplemented with a robust marketing budget: $2 billion this year, which is bigger than the annual content budgets for several of its rivals, including Apple, Facebook and AMC Networks. “I’m confident that we’re doing justice to our programming,” said Holland. Netflix kicked off its marketing campaign for Season 3 of Stranger Things earlier this month with a fake mall spot, even though that show won’t return until next summer. “It’s a hand-crafted show,” said Holland of Stranger Things, adding that the Duffer Brothers, who created the series, “understand the stakes are high. They want to deliver something bigger and better than it did last year. …I think it will be worth the wait.” Looking ahead, Netflix is working to bulk up its international programming slate and produce series in all its territories. “We want every country to have its Narcos,” Holland said. The exec admitted that Netflix was “hamstrung” by its early deals for 13-episode seasons of shows like its Marvel series, which mirrored standard cable orders at the time but often cause those seasons to drag creatively. Now Netflix’s seasons are more likely to be 8-10 episodes in length.