Netflix data shows shifting demand down the Long Tail

Chris Anderson, author of The Long Tail recently posted this graph on his blog, showing changes to Netflix usage with a decline in rentals at the head, and increase in the tail.
The Long Tail analysis by Wharton contradicts Anderson’s analysis saying.

“Contrary to Anderson’s suggestion and independent of how popularity is measured, Wharton researchers find that consumers tend to be less satisfied with niche movies than with hit movies. Moreover, it is mostly heavy movie watchers who venture into niche movies. Since only a small fraction of consumers constitute heavy movie watchers, it is not surprising that there is weak evidence of the Long Tail effect, Netessine concludes.”

Whatever the conclusion, whether the Long Tail does not exist, or it is fattening as consumers stray from the big hits to more niche market or back catalogue purchases, the likes of Ponoko, Shapeways and Thingiverse will benefit from the more discerning (and distributed) tastes of the emerging market. As search engines and aggregators make available the bespoke, made to order items, mass customization and personalization gains traction, the mass produced (very) slowly are condemned to the shelves of Walmart and Ikea.

The Long Tail” was a concept put forth by Chris Anderson in an October 2004 Wired magazine article which described the niche strategy of businesses, such as Amazon.com or Netflix, that sell a large number of unique items, each in relatively small quantities. Anderson elaborated the Long Tail concept in his book The Long Tail: Why the Future of Business Is Selling Less of More. Given a large enough availability of choice, a large population of customers, and negligible stocking and distribution costs, the selection and buying pattern of the population results in a power law distribution curve, or Pareto distribution. This suggests that a market with a high freedom of choice will create a certain degree of inequality by favoring the upper 20% of the items (“hits” or “head”) against the other 80% (“non-hits” or “long tail”). This is known as the Pareto principle or 80–20 rule.

via The Long Tail Blog and my buddies at Wikipedia.