It aims to create a social system that changes what movies customers see, based on what movies other customers are seeing. Netflix doesn't just aspire to build a super-efficient distribution system. In the Netflix model, customers don't just influence the performance of the company-they influence other customers, whose choices, in turn, influence them. This is a crucial insight about satisfying customers-one that applies far beyond the movies. The way you solve the problem is to use the insights of other people to build a community effect. But most people can't tell you ten movies they're dying to see because they know they're going to be great. There are 300 million Americans over there.
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"But the real problem we're trying to solve," he continued, "is, How do you transform movie selection so that consumers can find a steady stream of movies they love? It's a huge matching problem. Obviously, he argued, Netflix has to solve the problem of delivering movies with convenience and simplicity. "It's possible to totally misunderstand Netflix," CEO Reed Hastings told me a while back, when I was researching the company for the book, Mavericks at Work. In other words, Netflix's innovations in terms of distribution matter because its service enhances the quality of selection-tapping the collective intelligence of millions of members to help individual members discover movies they wouldn't find otherwise.
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The "killer app" at Netflix is Cinematch, homegrown recommendation software that suggests specific movies that customers might like, given what movies they've already seen and liked, and that customers who share their tastes have seen and liked.
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Tap the Collective Intelligence of Customers It's about shaping what movies those customers watch in the first place-and that's a secret from which every company can learn. But I'd argue that the secret of Netflix's success isn't just about changing how its customers watch movies.
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