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When you're running a small business, sometimes there are no words. But if you're looking to protect your small business, then there are definitely words that can help. Like a good neighbor, State Farm is there. And just like that, a State Farm agent can be there to help you choose the coverage that fits your needs. Whether your small business is growing or brand new, your State Farm agent is there to help. On the phone or in person. Like a good neighbor, State Farm is there.
As we're working on this podcast, coronavirus has left most of us physically cut off from work, family, and friends. But one thing we still have is television. Where does your TV show air? On the internet worldwide. I've been doing this 20 years, never even been bit. Netflix released Tiger King in March, when the pandemic kept many of us from going to work or anywhere, and it quickly became a cultural sensation. Carol Baskin.
When we started this podcast, it was still normal to go to an office or use public transit or simply leave your house. And while it seems like the world outside our homes is dangerous and chaotic, there's a weird comfort in uniformity going on inside. It seems like everyone we know is home, sitting on the couch and streaming Netflix.
Welcome to Land of the Giants, The Netflix Effect. I'm Rani Mola. And I'm Peter Kafka. We're making the show at home because we have to. And we're also watching a lot of Netflix at home because what the hell else are we going to do? One thing we noticed is that many of us seem to be watching the same stuff. And a lot of that is Netflix's own stuff. Take Tiger King. Suddenly, everyone was talking about it. On
on Twitter and in the news, but it was hard to tell. Did that happen because it was super good and interesting and escapist during coronavirus? Or did it happen because Netflix made a show that it really wanted us to watch? Was it coming up in three separate spots on my homepage because Netflix knew I would like it? Or because Netflix wanted me to like it? At its origins, Netflix is a tech company. It invested heavily in homegrown software, like its recommendation algorithm, that helps you find shows you'd want to watch.
Because if you don't, you might not keep paying $13 a month for it, especially since there are a lot of other streaming options vying for your time and your money. But now Netflix considers itself a media company. It's investing huge amounts of money making its own TV shows and movies. And it's not entirely clear how the company balances those priorities. Where it draws the line between making you happy and making good on its own investments.
The only people who really know what's going on with Netflix's recommendations work at Netflix. But Peter and I wanted to see what we could learn about the system if we simply watched how its recommendations changed over time. So we tried a little experiment. Okay, Bridget, it wants us to verify the account. All right, the code. Yeah. Ready? Yeah. 370604. Back in December, Peter and I created brand new Netflix accounts. Both of us have been using Netflix forever, and my recommendations are totally messed up from family and friends using my account
Well, actually, it's my partner's account. But Peter and I wanted to see what happens when Netflix doesn't know anything about you and how that changes as it learns more about you. Netflix wants to know three things that I like from a selection of things they're offering me. I picked Breaking Bad, Into the Spider-Verse. And Narcos. And Narcos, which is a Netflix show. Here we are at the beginning of our experiment, before Netflix really knew anything about our tastes.
All right. We're at the top picks for Peter. This is the Netflix algorithm telling me what I might like. To be fair, we've only told it I like three things. So this is the least smart it's going to be. This is the most dumb it's going to be. Got it. Want to tell us what the first pick is? The Adventures of Sharkboy and Lava Girl. I happen to know what this is. Are you a child?
After our first session, the recommendations were not good. So I'm assuming because I told it I like Spider-Man Spider-Verse, which is a genuinely great movie, it's telling me I would want to watch Sharkboy and Lava Girl. A few months later, we tried again after we'd watched and rated a whole lot more stuff. And it started suggesting some really good stuff. But there's still a lot of things that really didn't fit our tastes. They really want me to watch New Girl?
Made by Fox. No longer on the air. Still on Netflix. The West Wing. I would definitely watch an episode of The West Wing here and there. Comedians in Cars I've already watched, but I would watch it again. Parks and Rec. I have never seen an episode of Parks and Rec. Really? It's so soothing. It's a good show. Yeah. And then again, in April, we reviewed our recommendations for a third time.
Netflix figured out that because I watch comedies like Portlandia, The Office, Arrested Development, that it should recommend low-stakes, easy-to-watch shows like The Good Place, Documentary Now, and Middle Ditch and Schwartz. You ever just want to go up nice and close and suck out a breath? Oh, that looks actually pretty good. That's the guy from Silicon Valley. That is 100% up my alley. I would watch that. I've already put it on my list because I love those guys. So none of those shows are in my popular Netflix queue, by the way.
It's notable that all along, Peter and I had completely different Netflix recommendations. Not only were the titles it showed us different, but the categories and the order and the art accompanying those recommendations were different, too. Even the idea of what's popular on Netflix is something that Netflix will change, depending on who it's talking to. Netflix has a top ten list that shows you the same shows that everyone is watching in your country. But it also shows you lists like trending on Netflix and popular on Netflix, which vary from user to user based on their profile.
So if I look at my popular on Netflix right now, Unbreakable Kimmy Schmidt is made by Netflix. Dead to Me is Netflix. Have a Good Trip Adventures in Psychedelics, No Thank You is Netflix. Hollywood is Netflix. Working Moms is Netflix. So five out of five is Netflix. I'm detecting a trend, Ronnie. It thinks I really like Netflix. Our takeaway, Netflix was getting better at figuring out what Ronnie liked to watch and what I liked to watch. And Netflix also seemed to think that we wanted to watch shows that Netflix made.
After the break, we asked Netflix about how its recommendation algorithm works. Support for Land of the Giants comes from Quince. The summer is not quite over yet, but shifting your wardrobe to the colder months could start now, little by little. You can update your closet without breaking the bank with Quince. They offer a variety of timeless, high-quality items. Quince has cashmere sweaters from $50, pants for every occasion, and washable silk tops.
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On September 28th, the Global Citizen Festival will gather thousands of people who took action to end extreme poverty. Watch Post Malone, Doja Cat, Lisa, Jelly Roll, and Raul Alejandro as they take the stage with world leaders and activists to defeat poverty, defend the planet, and demand equity. Download the Global Citizen app to watch live. Learn more at globalcitizen.org.com.
I'm trying to choose the person that I will spend the rest of my life with without even knowing what this person looks like. That's absolutely crazy. The analogy I use is we are a matchmaking service. We asked Todd Yellen, Netflix's VP of product, to explain how recommendations work. The cast from Love is Blind, Netflix's hit reality show, provides an assist. He made me want to be a better man.
It's beautiful. Instead trying to introduce the perfect love story between two people, we're making the perfect love story between a person and a piece of content. Really? You want to get married? Sure, yeah, let's do it. As a scientist, I'm a believer in this experiment.
And so to do that in any kind of matchmaking service, you have to know about each part of that couple. That starts with an exhaustive understanding of every Netflix subscriber's tastes. What did you watch last night? What did you watch a year ago? Did you watch two minutes and abandon the thing? Or did you watch the whole thing and binge through a series on a weekend?
When did you watch? What did you watch before? What did you watch after? The company also analyzes its own movies and shows by type and subcategory and a ton of other qualities. Is it dark? Is it light? Is there smoking? Is there sex? How much sex? Is it good for a nine-year-old? Is it good for a 25-year-old? Everything we can know about it is important for our matchmaking. Using that information, Netflix tries to find the best picks for you. Then it really tries to sell them to you by tailoring their promotion so you're more likely to watch them.
You can get a sense of how this personalization works if you look at someone else's homepage and see how different it is than yours, even if you have the same recommendations. Which takes me back to our experiment. Over time, not only did our suggestions get better, but the way Netflix promoted them to us got more personalized. But now all of you are here as our hostages. Follow our instructions and you'll be safe.
For instance, Netflix recommended Money Heist, this is a Netflix show from Spain, to both of us. But it showed me a picture of two men in masks standing over an injured woman. And I saw two guys, no mask, and no woman. Netflix is constantly testing everything about the way its recommendations work, including the images it shows you when it highlights a movie or show.
And Yellen says this kind of personalization is getting more important over time. At the beginning, and for many years, the most important part of the algorithm was putting the right title in front of the right person at the right time. Now that we've moved from a mostly licensed catalog of older content to a mostly original catalog of a lot more new content, we
We have to now make the title sing so you understand what you're seeing. So basically, Netflix thinks we both really wanted to see Money Heist, but we needed different images to make us know that we really wanted to see it. Most of the tech companies that Ronnie and I write about know everything about what you do on the Internet and off the Internet, what sites you visit and when, where you shop online and offline, and much more.
But since Netflix isn't in the ad business, it says it doesn't need to vacuum up as much of your personal data as Google or Facebook. Those tech giants get criticized all the time for what they do and don't show you. And that criticism has gotten much more harsh after the last election. This is about making sure that people can see for themselves what politicians are saying. It is hate speech. But no one accuses Netflix of destabilizing democracy or promoting hate speech and lies.
What Netflix does get criticized for is favoring its own content. When Ronnie and I started our brand new Netflix accounts, we weren't totally surprised to see the company using so much real estate to promote its own stuff. A couple years ago, Netflix chief content officer Ted Saranda said 85% of the company's programming budget will go towards originals, stuff it was going to own.
A big reason for spending billions of dollars on original content is that other media companies have been taking their own popular programming back from Netflix. Stuff like Friends, the Marvel movies, and The Office. "Okay, okay, you know what? This is disgusting. This is like a witch hunt. This is like the Blair Witch Hunt project." The Office has long been one of the most popular shows on Netflix. But it won't be for long. Netflix doesn't own it, and at the end of this year, it's going to lose it to NBC, which does.
There is content that Netflix wants you to watch. This is Matthew Ball, who used to be head of strategy at Amazon Studios. He knows a thing or two about streaming and original content, and he believes that Netflix has an obvious incentive to get you to watch the programs it owns. They have preferences, and those preferences tend to be the most valuable content, things that shape culture. It also tends to be content that they own because it's therefore cheaper for them than if you watch licensed content.
And so one of the starting points is just an understanding of the fact that they do tip their thumb on the scale. Why do they have preferences? If I'm watching something and they've paid for it, either they've licensed it or built it for themselves, as long as I'm watching it and I'm happy, shouldn't they not care? Let's say that you have two titles that are relatively equivalent.
One could be a sci-fi adventure that's Stranger Things or a sci-fi adventure that they are renting from a third party. They will have to keep paying for that title in perpetuity, where Stranger Things is something they own. They don't spend another dollar in 2021, in 22, 23, 24. He's got a point. I watched Stranger Things a couple years ago when it came out. A shadow grows on the wall behind you. What is it? What if it's a Demogorgon? And now I'm watching it again with my kids.
If Peter is going to invest 10 hours of his weekend in something, we would rather he watch or invest that 10 hours falling in love with something that we are going to have for years and years as opposed to friends, which you lose. These questions around which content Netflix pushes aren't new. I talked to Barry McCarthy, Netflix's former chief financial officer, about this.
He said that in the past, in the DVD days, that there were definitely internal debates about what kind of recommendations Netflix made to customers. That's because Netflix had to pay more to get copies of big blockbusters and less for smaller movies. So I'd hope you might like some of those instead. And McCarthy said it's likely that similar discussions happen today. Yeah, I don't know how that managed that tension, but let's just formally acknowledge that that is an important tension that exists in businesses like that.
let's say you run the content team and you just spent 150 million to buy a movie,
Despite all this, what we saw in our experiment and what others told us, Netflix's official response is that it does not give preferential treatment to its own shows. Mostly.
Here's Netflix's Todd Yellen again. Sometimes people ask us, do you promote your originals more than other content? And the answer is at this stage, no.
because our interest is really one thing, keeping people subscribing month over month. He says there is one exception, though. When we launch something brand new that hasn't been out in the world, and it's an unknown title, when we first start it out, we're going to just for the first couple of days see who's going to watch it. But so much of what Netflix has to offer now are its originals, so it's really hard to believe that Netflix doesn't favor that content.
Right. So I also pressed Yellen's boss, Greg Peters, Netflix's chief product officer, to see if he'd admit to favoring its content just a little. All things being equal, let's say there are two shows that I would like equally, Tiger King and something else that is not a Netflix show. Would you show the other one or would you then in that situation?
Show me Tiger King first. We don't have like tie-breaking logic like that because the answer is that, you know, if you take it out to enough decimal places, not all things are equal. So we'll conclude that one of those is a better fit for you. Basically, he's saying there's no such thing as two shows that thinks you like equally. There's always going to be one that you like a little bit better, even just a teeny bit better. And Netflix's software is going to show you that no matter who made the show. But it would also be weird if the billions of dollars it's spending on its own content has no influence on its choices, right? Absolutely.
I agree. Although we're not going to hear that from Netflix. Even after all that heavy promotion, you might be surprised to know that not everyone on Netflix watched Tiger King. 20 million more people, it turns out, watched something called Spencer Confidential. It's a Mark Wahlberg action movie made by Netflix. I saw a lot of promotion for it and I ended up watching it and it was not very good.
But I like action movies, so I can see why Netflix thought I might try it. Yeah, Tiger King seemed like something I could be into, even though I did only make it through two episodes before I gave up. And to be fair, it never tried to get me to watch Sharkboy and Lavagirl. Rani, you should not diss Sharkboy and Lavagirl till you try it. No. You never know. You contain multitudes. I don't contain Sharkboy and Lavagirl.
So we don't totally buy that Netflix isn't prioritizing its own stuff. But at least it's giving us Netflix content that fits with our own tastes. Whether that's the best thing we could be watching, the jury's still out.
Regardless of whether it's favoring its own content, the main purpose of Netflix's recommendation system is to sort through all the stuff you could watch. It makes the service usable and keeps customers happy. When Netflix started, it was competing against Blockbuster, which offered customers really limited choices. You could only watch whatever it carried in your local store and whatever your local store hadn't already rented to someone else. So Netflix, which offered almost everything in the world, felt like a much better option. Today, Netflix actually has a lot less inventory than it did in the DVD days.
According to Real Good, a streaming service search engine, Netflix had more than 11,000 movie and TV titles in 2012. Now it has about half that, but that's still a lot. One of the criticisms you hear of Netflix from competitors, from people who make its shows, and from customers, is that there's just too much there and it's hard to find what you want. There's also a lot more competitors now, like Disney, HBO, Amazon Prime, Apple TV.
But all that choice isn't necessarily a good thing. Who wants to spend all their time deciding what to stream when they get home from work? Netflix will still let you do that if you want, but it thinks it's much better off finding you the stuff you want to watch, even if you didn't know you wanted to watch it. When you have too many choices, it's important to curate this in a way that
that it doesn't feel like an information overload. So curation gets important when the number of alternatives increase. This is Ravi Dhar. He's an expert on consumer behavior, and he's a professor at the Yale School of Management. He notes that when Netflix or HBO or Amazon wants to get you to sign up, they brag about all the variety they have. It's what draws you there in the first place. But then they have to whittle it down. Ah!
After you join, that same choice can sometimes make you dissatisfied, saying, hey, I don't know what to watch. I'm confused. This restaurant has too many options. So the curation piece can reduce that a lot. And I think Netflix does a particularly good job of curating. If you look at your preferences, how they provide them, you don't see at any given time like thousands of stuff. Netflix is successful because it does a good job of recommending you stuff and then getting it to you in an instant.
Some might even say it does its job too well. Which leads us to one last thing. Netflix's CEO Reed Hastings famously said that his main competitor isn't Amazon or Hulu, it's sleep, which has led to a lot of hand-wringing about whether or not Netflix is bad for your health. We all love to Netflix and chill, but should more of us be Netflix and taking breaks instead?
All that binging though can come with some pretty nasty side effects. Damaging our brains, even comparing the worst cases to gambling addiction. So Peter, I looked into this and reached out to a few doctors and psychologists. A lot of the most inflammatory news stories about how Netflix is destroying our health are based on the idea that it could lead to a sedentary lifestyle, which in turn causes a bunch of health problems.
People can also use binge watching to escape their regular lives. And instead of making them feel better, they end up feeling worse about themselves. Right, but these are the same problems associated with watching too much TV in general. Exactly. And by the way, there are other escapist activities one could partake in. There's overeating, there's drug use, you could mix them all together. You can let your imagination run wild at this point. And now that we're all stuck at home, any kind of escape seems more attractive than ever. I will confess that I do like the old days when you could escape by leaving your house.
But I guess this is what we have for now and the near future. So in our confinement, I think I will be watching Tiger King.
So, Ronnie, we've been talking about how Netflix uses the tech it created to get stuff in front of our eyeballs. But what about that stuff it's showing you? Netflix used to borrow everything it showed us from the big media companies. And now Netflix is making its own TV shows and movies. How did that happen and how's it going? We're actually going to get to that in the next episode. What happens when Netflix, the tech company, goes to Hollywood and remakes the entire media business?
They've outmaneuvered everyone in Hollywood for 15 years. And if I had to bet money, I'd bet I was wrong and they were right. My guess is they'll keep outmaneuvering everyone.
This podcast is a production of Recode by Vox and the Vox Media Podcast Network. This episode was produced by Bridget Armstrong and Zach Mack. Our editor is Charlie Herman. Gautam Shrikashen engineered and scored this episode and composed our theme. Zach Mack is our showrunner and Ishat Kerwa is the executive producer. Quick disclosure, Vox.com and Vox Media make shows for Netflix. None of the people working on this season of Land of the Giants are involved in the production of those shows. I'm Peter Kafka. And I'm Rani Mulla. Thanks for listening.
A ten-year-old dreamer's imaginary friends, Mighty Shark Boy and fire-producing Lava Girl, come to life to seek his help battling a nefarious baddie. "He was saved by the sharks, who raised him as their own. He grew gills and fins. His teeth became sharp, and we became friends."
