A study on Netflix using Big Data Analytics

Big Data Ecosystem

Term 4
Academic Year: 2019-20

Team Project
Submitted By Group1
Team Members:
Nishant Singh (137)
Rahul Kumar (139)
Rahul Sharma (140)
Rohit Verma (144)
Taran Singh (168)

Post Graduate Diploma in Management

Fortune Institute of International Business, New Delhi

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 Table of Contents

About the Company ................................................................................................................... 3

Netflix Timeline: A Brief History of the Company ................................................................ 3

Big Data Analytics at Netflix .................................................................................................. 4

How Netflix Gather Big Data? .................................................................................................... 5

1. Ratings: ........................................................................................................................ 5
2. Searches: ..................................................................................................................... 5
3. Date & Time: ............................................................................................................... 6
4. Devices on it is Watched: ............................................................................................ 6
5. Do the Credits get skipped: ......................................................................................... 6
6. When a Program is paused: ........................................................................................ 7
How Netflix Uses Big Data ......................................................................................................... 7

1. Finding the Next Smash Hit Series: ............................................................................. 7

2. Personalised Video Ranker:......................................................................................... 8
3. Top N Video Ranker Algorithm: .................................................................................. 8
4. Trending Now: ............................................................................................................. 9
5. Continue watching: ..................................................................................................... 9
6. Video-Video Similarity Algorithm: ............................................................................... 9
Conclusion ................................................................................................................................ 10

References ............................................................................................................................... 10

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About the Company
Netflix is one of the world's leading internet entertainment service provider and Production
Company which is headquartered in US, California. The company’s main business is its
subscription-based streaming service. Currently Netflix is having over 151 million paid
memberships in over 190 countries. (Netflix MediaCenter) The users can enjoy online streaming
of TV series, documentaries and feature films across a wide variety of languages and genres.
Subscribers/members can watch media on any internet-connected screen anytime; anywhere
and as much as they want without any restrictions. Users can also play, pause and resume
watching online media content without any commercials. Company is operating worldwide
and has their offices in major countries like India, Japan, Netherlands, Brazil and South
Korea.

Netflix Timeline: A Brief History of the Company

1977 to 2001
• 1977 Netflix was founded by Reed Hastings and Marc Randolph
• 1998 Netflix launched their first website netflix.com
• 1999 Netflix offered unlimited DVD rentals for one low monthly price.
• 2000 Netflix introduced personalized movie recommendation system.

2002 to 2006
• 2002 Netflix went for an IPO on Nasdaq (initial public offering)
• 2005 Netflix has 4.2 million subscribers base.

2007 to 2011
• 2007 Netflix introduces streaming allowing users to instantly watch TV shows and
Movies.
• 2008 Netflix partnered with companies to reach out more subscribers and stream
on devices like Xbox 360, Blu-ray disc players and T.V. Set-top boxes.
• 2009 Netflix partners with consumer electronics companies, and able to stream on
PS3, Smart TVs and other internet devices.
• 2010 Netflix launched their service in Canada and also available on Apple devices.
• 2011 Netflix Launched in Latin America and Caribbean.
(Netflix MediaCenter)

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 2012 to 2016
•2012 Netflix won its first Primetime Emmy Engineering Award. Netfix expanded their presence in
Europe including UK, Ireland and Nordic Countries.
•2013 Netflix launched its first series of original programs which includes the most popular program
House of cards.
•2014 Netflix expanded in Europe and got launched six new countries i.e. Austria, Belgium, France,
Germany, Luxembourg and Switzerland. During this Year they bagged 3 Primetime Emmy Awards.
•2015 Netflix Launches in Australia, New Zealand, Japan, Italy, Spain and Portugal. They also
released first Netflix Original Feature film "Beasts of No Nation"
•2016 Netflix service was available in total 190 countries around the world.

2017 to Present
•2017 Netflix won its first Oscar and reached to a subscriber base of 100 million members globally.
•2018 Netflix became the most nominated service with 112 nominations at Primetime and Creative
Arts Emmy Awards 2018 and got tied with HBO for most wins taking home 23 accolades.

(Netflix MediaCenter)

Big Data Analytics at Netflix

Big Data analytics is a process in which large sets of data is collected, organized and
analysed to discover patterns and other useful information. Big Data analytics can be very
helpful for the organizations to better understand the information contained within the data
and drive insights from it. Lastly help in taking important business and future business
decisions. The users on Netflix website are generating huge amount of data daily which is
being utilized by the company to drive insights using Big Data Analytics. This data had
helped the company to deliver personalize experience to their users and improving the user
experience on the website. This data also helped the company to identify new segments of
audience and their watching preferences. The data infrastructure of the company includes
Hadoop, Hive and Pig. They are also using business intelligence tools like Teradata and
Micro Strategy whereas Netflix also using its own open-source applications and services like
Lipstick and Genie. And, like the rest of Netflix’s core infrastructure, this all runs in the
Amazon Web Services cloud. (Bernard Marr & Co.)

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How Netflix Gather Big Data?
Big Data helps Netflix to decide which Programs or Web Show’s will be of User’s Interest
and same Influence the Content that we watch on it. Big Data gives the quantitative data
which Netflix need to make better and informed decisions. Netflix collects massive amount
of Behavioral data and then use the same data to create a better experience for their User’s.
Now the Question is how Netflix used to Gather Big Data?

1. Ratings: T.V. and Web Shows ratings allow the Netflix to understand the choices for
their Users. Each T.V. show and Web Series is assigned with a maturity rating which
were determined by Netflix. These Ratings reflect overall maturity level of the whole
series. Other than the mature rating the also have ratings for the shows which will help in
getting likes and dislikes of User’s. About 4 million ratings were given by User’s on per
day basis by the help of Ratings they used to gather the data and analyze it through
which Netflix can deliver relevant content to their User’s.

2. Searches: Netflix has about 3 million searches per day which allows them to gather
data on search content which will help them in getting valuable insights. According to
Netflix to better the user experience it should be able to recommend to its User’s that
what they should watch. Searches’ will help the Netflix to identify the likes and dislikes
of their User’s. According to the company analysis of Netflix a typical Netflix user
searched for 10 to 20 titles for 60 to 90 seconds and the 80% of content watched by its
User’s is influenced by its company recommendation.

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3. Date & Time: Over a 100 million subscribers, user’s like to watch their TV shows
with different timings, many of them watch in night or weekends as well. The Date and
time when they log in to their devices will help the Netflix to gather the data.
4. Devices on it is Watched: By this Netflix want to know on which device they feel
comfortable in streaming TV and Web Shows. Do the Customers like to watch on their
Smartphone’s or their Laptops, or do they watch on their Television using Firestick. Now
there’s another question that do the user’s access just for Kids feature or many other
features.

5. Do the Credits get skipped: By this Netflix wants to know what Users do
afterward? Do they want to leave the website or back to browsing? Netflix offers Movie
recommendations to their User’s by their personalized algorithm’s which aim what
User’s will watch next when the credit roll starts. If the User’s leaves the website after

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 watching a show then they have less interest in Web series. For this Netflix can
improvise to watch the content for more number of Hours. They can enable post-play
which automatically plays the next episode unless the User moves out.

6. When a Program is paused: For how much time a Program or Content is paused
and left? This will help the Netflix in identifying the preferences of the User’s. For E.g.
If you as a User watching a movie and seems to be interesting in watching that content.
Chances for pausing or leaving that content will be less and that’s how Netflix used to
identify preferences of their User’s and based on this data they Prefer more relevant
content to their User’s.

How Netflix Uses Big Data

1. Finding the Next Smash Hit Series: One of the most popular examples of the
Netflix use of big data to achieve success is the TV series “House of Cards”. Some of the
facts are:
a. House of Cards was original aired in 1990 on BBC and it was a great hit in the
UK. Because of its story based on the British parliament and politics it became a
huge hit at that period. But it only has 4 episodes, so people forgot about it later.
So, in 2008 Netflix brought the rights of the TV show from the authors of original
show plans to introduce it in US.
b. As Netflix started to have more and more subscriptions over the year, they started
to conduct some research on their users. They found that people in the US love to
watch the movie style of David Fincher (who is known for his dark and serious
theme base movies, like ‘Gone Girl’, ‘Fight Club’, ‘The Social Network’) and
Netflix also found that people love to watch the movies of actor Kevin Spacey.
So, by 2011 they started to work on the new “House of Cards” series which will
be based on the US politics, and it was directed by the David Fincher and its main
leading actor will be Kevin Spacey.
c. House of Cards made its first premier on February 1, 2013. Instead of launching a
piolet project and see how 1st season goes, Netflix had already started working on
second season. This was a huge gamble as their 100 million dollars was on the

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 line. But after its premier “House of Cards” became a huge hit with a rating of
8.8 out of 10 on IMDb.

d. Netflix stocks jumped from $14.17 to $24.23 and it added over 3 million new
subscribers worldwide. Since that the company had grown over 420% with its
shares trading at $100 as of March 2016.

2. Personalised Video Ranker: Personalising is one of important feature of the

Netflix which helps its users to discover the content they love. This feature helps the
users to spend less time on finding out something to watch and more time on something
which they like the most. For this Netflix is using the algorithms, which analysis the data
of the users which consists of search history of the users, the likes & ratings of the users,
amount of time spend by the users etc. By this Netflix is able to shows all the titles which
according to their algorithms would be best suited for their users, so that they don’t have
to spend time on the searching for a show according to their preferences. It is seen that
Netflix personalization level is so high that the same genre row for each member has
entirely different selection of videos.

3. Top N Video Ranker Algorithm: Top N Video Rankers puts the

recommendations of the users on the Top Picks row. The main focus of the algorithm is
to find out the best of best Titles for the users from the personalised recommendation
category. For this Netflix uses the data of the users where it evaluates the category of
shows liked by the users and then find out which all others show are there which have
the same category, and which are having the high ratings. After that their algorithms
gives some ratings to the shows and find out the top shows according to the ranking

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given by the algorithms and show it on the home page of their account. This helps the
users to see which top shows would be best for them.

4. Trending Now: This feature shows the users which all shows are trending on the
Netflix infused with some personalisation. For this algorithm of Netflix works on two
types of data which are Viewing History (what all videos watched by the users) and
Beacon (which capture all the activities & events of users within Netflix). Now the
data collected by them are send to Kafka (it is a system which handles millions of
events per second). Then Kafka takes out the data of Play Popularity (how many
times a video is played) and Take Rate (numbers of impressions on events). After all
of this algorithm finds out the trending shows according to their ratings based on the
play popularity & take rates.

5. Continue watching: Sort the recently watched tab on the basis of the user’s
interest and their anticipation of resuming a show. For this the algorithms of Netflix
works on the Show Ranking Model (ranking based on the resume capabilities of the
show form its other users) and Row Placement Model (model that find out the
likelihood of the continuity of the show). After that it calculated the time elapsed of
the show when it was last seen or watched by the user. Then algorithms give the
ranking according to their capabilities of being watched again or continue watching.

6. Video-Video Similarity Algorithm: Through the analysis of the data by the

Netflix, it finds out that, if a user watched a particular show or video then what all
other similar shows or videos would be liked by them. So, Netflix uses the similarity

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 ranking to give the ranks to different shows which the user might like. Now this
ranking might not include the personalisation, but it gives a good idea on what a user
will love on their previous watch history.

Conclusion
Powerful analytics tools and models can process billion of data and generate meaningful
information, but the success of Netflix lies in its judicial use of data analytics. The big data
and analytics are so important for the Netflix success that some experts call it an analytics
company instead of a media company. The success of Netflix across globe shows us the value
of data analytics because it tells us how efficiently Netflix generated the insights and provides
its services according to the user’s preferences. Their algorithms are so perfect that it makes
its users to continue streaming and watching the shows it provides. The level of
personalization is so high that users don’t have to waste their time on searching for the right
video or show. So, we can say that Netflix has used the data analysis in such a way that it has
stated generated them ROI.

References
Algorithms, R. (2017, August 28). The Artificial Intelligence that is shaping what we watch. Retrieved
from Redwood Algorithms: https://www.redwoodalgorithms.com/ra-
insights/2017/8/28/the-artificial-intelligence-that-is-shaping-what-we-watch

Bernard Marr & Co. (n.d.). Netflix: Big Data and giving people what they want. Retrieved 09 12,
2019, from bernardmarr.com: https://www.bernardmarr.com/default.asp?contentID=695

Dixon, M. (2019, April 5). How Netflix used big data and analytics to generate billions. Retrieved
from Selerity: https://seleritysas.com/blog/2019/04/05/how-netflix-used-big-data-and-
analytics-to-generate-billions/

InsideBigData. (2018, January 20). How Netflix Uses Big Data to Drive Success. Retrieved from Inside
Big Data: https://insidebigdata.com/2018/01/20/netflix-uses-big-data-drive-success/

Netflix MediaCenter. (n.d.). About Netflix. Retrieved 09 11, 2019, from media.netflix.com:
https://media.netflix.com/en/about-netflix

Sadeh, G. (2019, March 20). How Netflix uses big data to create content and enhance user
experience. Retrieved from ClickZ: clickz.com/how-netflix-uses-big-data-content/

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