For House of Cards and Arrested Development, Netflix favors big data over big ratings

If you’ve been on Netflix (s NFLX) lately, you may have seen a trailer for House of Cards, the company’s first big original content play. But chances are, the version of the trailer you got to see is different from the one that the site presented to me. That’s because Netflix is using ten different cuts, geared towards different audiences – and presents them to viewers based on their past viewing behaviour.

That kind of targeting is part of Netflix’s approach to use “a balance of intuition and analytics” for its original content, explained Netflix Chief Content Officer Ted Sarandos during an interview on the sidelines of the at All Things Digital’s Dive into Media conference in Dana Point, California Tuesday. Netflix is using “really big data,” as Sarandos put it, to evaluate everything from promotion of its original content to the question of which shows it is going to pick up next.

And we are talking not just simply audience size levels, but very fine-grained data, down to the engagement level with each individual piece of content, as well as the mix of content each subscriber is watching. “When you say ten million people watch a show, that really doesn’t tell you anything,” he said.

As a consequence, Netflix isn’t talking about how many people have been watching House of Cards ever since the show went up on the service earlier this month. “We are not doing ratings,” Sarandos said on stage Tuesday afternoon, adding the vague assesment: “We are thrilled with the numbers.” Asked what he would tell if House of Cards star Kevin Spacey called to ask about those numbers, Sarandos replied: “I don’t tell him.”

Creatives, however, don’t seem  upset about such secrecy. Arrested Development creator Mitchell Hurwitz and star Will Arnett, who joined Sarandos on stage, pointed to the problems they had with the industry’s love for ratings when their show was on air. Back then, Nielsen wasn’t including catch-up views from DVRs and online platforms in their ratings, and many of the show’s viewers simply didn’t register. “Appliance stores knew we were huge, but Nielsen didn’t give a sh*t about it,” Hurwitz joked. “The Nielsen system I think is incredibly flawed,” agreed Arnett.

That’s why a ratings-free approach is so appealing to creators, and potentially so disruptive to the industry as a whole. “The model is going to change,” predicted Hurwitz. Creatives would have to work with a different economic model, because a deal like the one with Netflix doesn’t include residuals. “The trade-off is that we are encouraged to make a more interesting show as opposed to flattening it out,” he said. Arnett agreed: “It’s very inviting to people in the creative community to have a place like Netflix,” he said.

Sarandos echoed that sentiment when talking to me, admitting that his phone has been pretty much ringing non-stop ever since the company announced that it got David Fincher to do House of Cards. “We became a first stop as opposed to a last stop,” after that announcement, he said.

This story was corrected on Sunday 2/17 with the correct first name of the creator of Arrested Development. His name is Mitchell Hurwitz, not Michael.