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HowNetflixUsesBigDatatoDriveBusinessSuccess|SmartDataCollective

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BigData:HowNetflixUsesIttoDriveBusinessSuccess
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PostedApril21,2015

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Keywords:netflix,TheBigDataGuru,BigData

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LegendaryHollywoodscreenwriterWilliamGoldmansaidNobody,nobodynotnow,noteverknowsthe
leastgoddamthingaboutwhatisorisntgoingtoworkattheboxoffice.
HewasspeakingbeforethearrivaloftheinternetandBigData,andsincethen,thestreamingmovieandTV
serviceNetflixhasbaseditsbusinessmodelonattemptingtoprovehimwrong.
NetflixissaidtoaccountforonethirdofpeaktimeinternettrafficintheUS.Lastyearitannouncedthatithad
signedup50millionsubscribersaroundtheworld.Datafromallofthemiscollectedandmonitoredinan
attempttounderstandourviewinghabits.Butitsdataisntjustbigintheliteralsense.Itisthecombination
ofthisdatawithcuttingedgeanalyticaltechniquesthatmakesNetflixatrueBigDatacompany.
Aquickglanceatitsjobspageisenoughtogiveyouanideaofhowseriouslydataandanalyticsistaken.
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Specialistsarerecruitedtojointeamsspecificallyskilledinapplyinganalyticalskillstoparticularbusiness
areaspersonalizationanalytics,messaginganalytics,contentdeliveryanalytics,deviceanalyticsthelist
goeson.
HoweveralthoughBigDataisusedacrosseveryaspectsoftheNetflixbusiness,theirHolyGrailhasalways
beentopredictwhatitscustomerswillenjoywatching.BigDataanalyticsisthefuelthatfiresthe
recommendationenginesdesignedtoservethispurpose.
Predictingviewinghabits
Effortsherebeganbackin2006,whenthecompanywasstillprimarilyaDVDmailingbusiness(streaming
beganayearlater).ItlaunchedtheNetflixprize,offering$1milliontothegroupwhichcouldcomeupwiththe
bestalgorithmforpredictinghowitscustomerswouldrateamoviebasedontheirpreviousratings.
Thewinningentrywasfinallyannouncedin2009andalthoughthealgorithmsareconstantlyrevisedandadded
to,theprinciplesarestillakeyelementoftherecommendationengine.
Atfirst,analystswerelimitedbythelackofinformationtheyhadontheircustomersonlyfourdatapoints
(customerID,movieID,ratingandthedatethatthemoviewaswatched)wereavailableforanalysis.
Assoonasstreamingbecametheprimarydelivermethod,manynewdatapointsontheircustomersbecame
accessible.Datasuchastimeofdaythatmoviesarewatched,timespentselectingmoviesandhowoften
playbackwasstopped(eitherbytheuserorduetonetworklimitations)allbecamemeasurable.Effectsthat
thishadonviewersenjoyment(basedonratingsgiventomovies)couldbeobserved,andmodelsbuiltto
predicttheperfectstormsituationofcustomersconsistentlybeingservedwithmoviestheywillenjoy.Happy
customers,afterall,arefarmorelikelytocontinuetheirsubscriptions.
AnothercentralelementtoNetflixsattempttogiveusfilmswewillenjoyistagging.Itpayspeopletowatch
moviesandthentagthemwithelementsthatthemoviescontain.Itwillthensuggestyouwatchother
productionswhichweretaggedsimilarlytothosewhichyouenjoyed.Thisiswherethesometimesunusual
(andslightlyroboticsounding)suggestionscomefrom(Inthemoodforwackyteencomedyfeaturinga
strongfemalelead?)
Itsalsothereasonthattheservicewillsometimes(infactinmyexperience,often!)recommendIwatchfilms
whichhavebeenratedwithonlyoneortwostars.Thismayseemlikeitiscounterintuitivetoitsobjectiveof
showingmefilmsIwillenjoy.Butwhathashappenedisthattheweightingoftheseratingshasbeen
outweighedbythepredictionthatthecontentofthemoviewillappeal.
Thisarticleexplainsthesciencebehindthatprocessinabitmoredepth,andhowNetflixhaseffectively
definednearly80,000newmirogenresofmoviebasedonourviewinghabits!
Findingthenextsmashhitseries
Morerecently,Netflixhasmovedtowardspositioningitselfasacontentcreator,notjustadistributionmethod
formoviestudiosandothernetworks.Itsstrategyherehasalsobeenfirmlydrivenbyitsdatawhichshowed
thatitssubscribershadavoraciousappetiteforcontentdirectedbyDavidFincherandstarringKevinSpacey.
AfteroutbiddingnetworksincludingHBOandABCfortherightstoHouseofCards,itwassoconfidentthatit
fitteditspredictivemodelfortheperfectTVshowthatisbuckedconventionofproducingapilot,and
immediatelycommissionedtwoseasonscomprisingof26episodes.
EveryaspectoftheproductionunderthecontrolofNetflixwasinformedbydatathisWiredarticleexplains
howeventherangeofcolorsusedonthecoverimagefortheserieswasselectedtodrawviewersin.
TheultimatemetricwhichNetflixhopestoimproveinthenumberofhoursthatcustomersspendusingits
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service.Youdontreallyneedstatisticstotellyouthatviewerswhodontspendmuchtimeusingtheservice
arelikelytofeeltheyarentgettingvalueformoneyfromtheirsubscriptions,andthereisadangertheywill
canceltheirsubscriptions.
Qualityofexperience
Tothisend,thewaythatvariousfactorsaffectthequalityofexperienceiscloselymonitoredandmodelsare
builttoexplorehowthisaffectsuserbehavior.
AlthoughitsvastdatabaseofmoviesandTVshowsishostedinternallyonitsowndistributednetworkof
servers,itisalsomirroredaroundtheworldbyISPsandotherhosts.Aswellasimprovinguserexperienceby
reducinglagwhenstreamingcontentaroundtheglobe,thisreducescostsfortheISPssavingthemfromthe
costofdownloadingthedatafromNetflixserverbeforepassingitontotheviewersathome.
Bycollectingenduserdataonhowthephysicallocationofthecontentaffectstheviewersexperience,
calculationsabouttheplacementofdatacanbemadetoensureanoptimalservicetoasmanyhomesas
possible.Datapointssuchadelaysduetobuffering(rebufferrate)andbitrate(whichaffectsthepicturequality
ifyourewatchingafilmonNetflixthatsuddenlyseemstoswitchfromrazorsharpHDtoablurrymess,
youveexperiencedabitratedrop)arecollectedtoinformthisanalysis.
NetflixhasusedBigDataandanalyticstopositionitselfastheclearleaderofthepack.Ithasdonethisby
takingonotherdistributionandproductionnetworksattheirowngame,andtrumpingthemthroughinnovative
andconstantlyevolvinguseofdata.
ItfacescompetitionnowandintothefutureofcoursemostnotablyAmazon,whichpurchasedUKbased
NetflixrivalLovefilmin2011,acquiringitsuserdataandmeldingitwiththeirownadvanceddatainfrastructure
andanalysisplatforms.WillAmazonwhichpioneeredtheartofrecommendationsbeforeNetflixeven
existedunseatNetflixfromitsperchaskingofthestreamingcontentproviders?NottomentionthatApple
isabouttolaunchitsnewAppleTVservicetocompeteinthisspace.Timewilltellbuttheracetodevelop
moreaccurateandinsightfulanalyticstrategieswillbeakeydecider.
Asalways,thankyouverymuchforreadingmyposts.Youmightalsobeinterestedinmynewbook:Big
Data:UsingSmartBigData,AnalyticsandMetricsToMakeBetterDecisionsandImprovePerformance
Youcanreadafreesamplechapterhere.

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Formore,pleasecheckoutmyotherpostsinTheBigDataGurucolumnandfeelfreetoconnectwithmevia:
Twitter,LinkedIn,Facebook,SlideshareandTheAdvancedPerformanceInstitute.

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BernardMarr
BernardMarrisagloballyregognizedbigdataandanalyticsexpert.Heisabestsellingbusinessauthor,
keynotespeakerandconsultantinstrategy,performancemanagement,analytics,KPIsandbigdata.Hehelps
companiestobettermanage,measure,reportandanalyseperformance.Hisleadingedgeworkwithmajor
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Jonha,veryinformativearticle.Wedefinitelyareseeinganincreaseinactivitywithcompanies
respondingtotheimpactbigdatahasmadeontheirbusiness.Forcompaniesofanysize,getting
meaningfulinsightsfromdataanalyticsisanimportantpriority.LexisNexishasopensourceditsHPCC
Systemsbigdataplatformwhichrepresentsmorethanadecadeofinternalresearchanddevelopment
in...
August12th,2015byDataH
Idoagreewiththeviewpointsyoumentioned,hereisjustmyrandomthoughtafterreadingthisarticle:
tokeepupwiththebusiness,wemusttakecareofSocialMediacompanysocialmediaaccounts
suchasLinkedInGroups,TwitterprofilesandFacebookpagesareanexcellentwaytostayconnected
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