Today we are going to talk about something interesting and it is something you are probably going to relate to.

We all love Netflix and part of the reason is because it has such an amazing algorithm that can recommend us things that we really might like.

However, have you ever wondered how this works? How is Netflix able to predict and recommend shows with such accuracy?

That is exactly what we are going to find out and understanding this is important not just for regular people but especially for AI engineers and people who are fascinated by AI.

The Netflix recommendation algorithm is so accurate that nearly 80% users discover new content with the help of personalised recommendations.

It is also important for anyone who loves tech and also uses Netflix because Netflix is such a popular streaming service it has 260 million users worldwide.

So, let us start by understanding why Netflix is the top streaming service in the world.

Why Is Netflix the Top Streaming Service in The World?


One of the most important reasons why Netflix is loved throughout the world and is the top streaming service is simply because of its recommendation’s quality.

If you open your Netflix account and your friends and Netflix account then you are going to find that your recommendations are completely different from any other person’s.

This level of customizability is just like having your personal assistant select the movies for you based on your likes and dislikes.

This ability to study users and provide them with custom recommendations is one of the reasons why it is loved so much.

And this is why Netflix is the top streaming service in the world.

Netflix Stats


Amazing Selection

One of the other reasons why Netflix is so popular is not just because of utilising AI to provide you recommendations, it is the Netflix library.

The complete Netflix library has over 9000 titles and if you look at the individual data from every region then Netflix has an average of 7000 titles on average for every country.

Netflix Stats



If we consider the pricing of Netflix subscriptions then it is significantly lower than buying individual movie CDs and it is even more significantly lower if you consider watching all those movies at a movie theatre.

We have to understand that this level of convenience makes sure that your Netflix subscription per month is barely the cost of going to the movies two or three times.

This means you get to have access to a library that consists of over 7000 titles for the price of two or three movie tickets.

This is one of the reasons everyone likes Netflix and Netflix still manages to generate revenue from such competitive pricing.

Netflix Stats



And finally, we come to accessibility because accessibility is one of the reasons why Netflix is loved so much and why it is so successful.

Imagine paying a few dollars for a subscription service that lets you watch over 7000 titles of movies and TV series and you get to log in with an ID and password from all your digital devices.

This means you can watch Netflix on your computer or you can watch it on your TV or on your smartphone.

Sometimes you do not even have to sign in with an ID password and all you need to do is to scan a QR code and you will get logged in easily.

Now that is convenient.

Netflix Uses AI for Recommendations

Collaborative Filtering Algorithms

The Netflix algorithm is always changing and getting updated and collaborative filtering was one of the primary methods utilised by Netflix to find out user patterns.

Collaborative filtrating is simply when Netflix categorises users based on similar viewing history.  This helps Netflix understand and create different patterns and different groups of people.

This then helps the algorithm recommend similar things to similar groups of people with similar content preferences.

However, this is not really very accurate or nuanced.

Content-Based Filtering

Content-based filtering goes into a little bit more detail in understanding the likes and dislikes of users based on specific themes or keywords of the content they consume.

For example, if a user likes movies from a certain director or certain actors then content-based filtering takes into consideration all that metadata.

In order to improve the accuracy of this algorithm, Netflix uses reinforcement learning techniques and also takes into consideration user feedback.

This means this kind of filtering takes into consideration everything from user behaviour to recommend the best kind of shows for the user.

Personalized Video Ranking (PVR)

The PVR algorithm is specifically used to sort the catalogue of titles by different characteristics and it is simply sorting them by genre.

For example, it is sorting the Netflix library into things like romance and comedy as well as science fiction, history, war and much more.

This can then be utilised by Netflix to recommend people content from similar catalogues based on their preferences and viewing history.

This is one of the most straightforward algorithms used by Netflix for personalised recommendations and it just recommends people things based on their viewing history.

Studies show that personalisation can improve customer satisfaction by nearly 20% and conversion rates by up to 15%.

Top-N Ranking

Top ranking is when Netflix utilises a kind of algorithm to focus on the top rankings of individual users based on their viewing history as well as their feedback.

This is quite similar to the PVR algorithm and it helps the algorithm understand the most popular titles within every category that has already been sorted by the algorithm.

That is why this can be utilised by Netflix to recommend people something even better from a specific category if the user has a viewing history related to that category of content.

Ranking of Interested Content

This is one of the most interesting areas of the Netflix algorithm in that it utilises AI to understand interested content.

For example, if you are browsing your Netflix and you click on a certain title to read the description then the algorithm is going to take that into consideration.

It will also take into consideration any kind of interaction you have with the titles. If you are scrolling Netflix and you have stopped your scrolling and you are looking at certain titles within a specific range of the webpage then Netflix will also take that into consideration.

It will also take into consideration titles that have been added to Watch Later.

It will also take into consideration titles you have watched halfway or you have started watching and quit.

It will calculate all those variables in order to come up with recommendations based on how likely you are to watch similar content.

Popular Movies Ranking

The interesting thing about the Netflix algorithm powered by AI is that it considers two things.

It considers personal user behaviour patterns and it correlates that to the wider audience as a collective.

This helps Netflix analyse the popularity of content and along with that it also takes into consideration the time of the year and if any key events are influencing the popularity of certain titles.

For example, if you open your Netflix account during Christmas then you are going to get recommendations for Christmas movies.

The algorithm takes into consideration global trends and this helps the algorithm suggest movies that are appropriate for the time.

This Is How Netflix Uses AI/ML And Data Science

Netflix Recommendations

The first and most important utilization of artificial intelligence and machine learning as well as data science for Netflix is definitely going to be the Netflix recommendations.

Machine learning helps Netflix recommend content very accurately and it also helps Netflix study the behaviour patterns of users in order to predict the popularity of unreleased content.

We need to understand that Netflix is a production company as well which means it invests a lot of money into creating new shows and new titles and since it has such an amazing grasp on recommendations, it is also able to utilise that in order to predict the success rate of particular types of content.

The Netflix algorithm also helps it adapt to the preference change of users which is simply not possible without AI or machine learning.

Auto-Generated Thumbnails

One of the other areas where Netflix utilises AI heavily in the form of a Gen AI is when it comes to autogenerated thumbnails.

Yes, the thumbnails are all auto-generated for you and there are a lot of factors Netflix takes into consideration.

The algorithm understands the success rate of different kinds of thumbnails and makes changes to them by understanding the behaviour patterns of users and including highlighting certain themes in thumbnails so that the thumbnail is much more effective.

We cannot stress the importance of thumbnails enough. They are the gateways to viewership and engagement.

Streaming Quality

Nobody likes buffering and people would much rather accept a lower quality of the stream than tolerate buffering simply because it is very irritating.

This is another area where the algorithm utilises AI in order to understand network strength and reduce the quality of the video automatically so that the movie viewing experience does not stop.

This is much more complicated than it seems at the surface but it works every time.

This is so popular that all the Netflix rivals also try to implement something along the lines of this.

Overall User Experience

If we talk about the overall user experience then Netflix heavily utilises AI and machine learning to understand behaviour patterns.

This helps the algorithm to make minute changes to everything from improving the legibility of the subtitle to balancing the audio and the overall user interface.

There are so many changes made under the radar that it is impossible to list all of them but the beautiful thing about this is that the algorithm is continuously making improvements whether it is in the form of personalised recommendations or even adding options for new languages or even changing the font.

The user experience does not stop just there because Netflix also has to make sure the performance of the website of the app is excellent in spite of having 7000 titles on average.

Marketing, Investments and Production

We must not forget the fact that Netflix is a business and it is also a production company that has its own shows and movies.

This means it has to decide a lot of things for its movies such as what kind of movies are going to be generating the best revenue and even choosing different specifics of those productions including the locations of the movies.

Along with that Netflix also has to come up with intelligent marketing strategies that help it stay afloat among the competition.

Having a very effective marketing strategy is important for Netflix when there are so many competitors out there.

Netflix heavily relies on AI and ML when it comes to investing in the right titles. It spends billions on content each year.

Netflix Stats


That’s why this is one of the reasons for Netflix staying at the top in spite of its competitors like Disney Plus spending much more on marketing.

Netflix Stats


The algorithm utilises AI for all these tasks whether it is choosing the location for the next Netflix original shoot or whether it is deciding the focus on the memes for the next marketing campaign.

Benefits Of AI Utilisation for Netflix

For The Company

One of the biggest benefits of utilising AI for Netflix is simply improved engagement which means the algorithm is utilising AI to recommend shows more accurately which means more people are watching the shows.

When people watch more shows, it increases the overall engagement of the entire platform which means more people are willing to license their movies to Netflix which directly correlates to better revenue.

Netflix Stats


We also need to understand the fact that AI utilisation helps Netflix provide a better experience for the users with also helps improve the popularity of the platform which directly relates to better revenue.

For The Consumers

The consumers get a very personalised experience based on their likes and they do not even have to provide their active feedback in order for that customised experience.

They simply have to use the app and the algorithm is going to find out what they like or dislike and provide them with a better experience.

This becomes very important when you have a library as huge as Netflix because it is very difficult to discover the next big show if you do not have an effective algorithm as good as Netflix has.

AI utilisation enables Netflix to provide a better user experience for the consumers throughout the entire interface of the app whether it is when streaming shows or whether it is when browsing for shows.

This means even more people trusting Netflix with their entertainment needs.

Netflix Stats


We hope this blog helps you understand all the benefits of utilising AI when it comes to the Netflix algorithm. This algorithm has actually helped Netflix stay on top as the most popular streaming platform in the world.

Algorithms have the power to change the user experience and accelerate your brand from a regional power to a global power.

If you want to utilise AI and Machine Learning in your own business operations then we are here for you.

We are Think To Share IT solutions and we are renowned for our AI utilisation solutions. We will help you integrate AI into all your business operations and into your client assistance algorithms.

Additionally, we do everything related to IT with our extensive list of over 20 IT solution services. We welcome you to visit our website and check out everything we do.