olivier 25 weeks ago

Is Netflix assuming that selecting movies that are more in-tune with what a customer wants to watch will actually yield more revenue?

That would be incorrect.

  1. The reality is that Movie viewing time is pretty much inelastic, so better movie recommendations aren't likely to drive up demand (or frequency... or velocity).
  2. I'm not even going to bother with #2 and #3. #1 is enough of a roadblock to make algorithms mostly irrelevant when it comes to creating a 10% increase in revenue for this sort of business model.

Netflix can grow revenue by increasing its marketshare, not by increasing the number of movies watched by existing customers.

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