Introduction of Artificial

Intelligence
• Case study – Artificial Intelligence in Netflix
Recommendations

Submitted by : Ashish Kumar, Karan Verma, Shariyans Malviya(bft3)

Submitted to : Mrs. Usha Yadav

Artificial
intelligence
THE ABILITY OF A DIGITAL COMPUTER OR COMPUTER -
CONTROLLED ROBOT TO PERFORM TASKS COMMONLY
ASSOCIATED WITH INTELLIGENT BEINGS.
Presentation Title
Free PowerPoint Templates - prezentr.com
Recommendation
System
Artificial Intelligence at Netflix:
• Netflix is a media service provider that is based out of America. It provides movie streaming
through a subscription model. It includes television shows and in-house produced content along
with movies. Netflix initially started as a DVD rental service in 1998. This resulted in heavy losses
which they soon mitigated with the introduction of their online streaming service .In 2010, they
went online and started a streaming service. Since then Netflix has grown to be one of the best and
largest streaming services in the world (Netflix,2020).
• In order to make this happen, Netflix invested in a lot of algorithms (of ai )to provide a flawless
movie experience to its users. One of such algorithms is the recommendation system that is used
by Netflix to provide suggestions to the users. A recommendation system understands the needs of
the users and provides suggestions of the various cinematographic products.
 What is a Recommendation System?
• A recommendation system is a platform that provides its users with various
contents based on their preferences and likings. A recommendation system
takes the information about the user as an input. This information can be in
the form of the past usage of product or the ratings that were provided to the
product. It then processes this information to predict how much the user
would rate or prefer the product.

• The recommendation system searches for movies that are similar to the ones
you have watched or have liked previously. This is an important method for
scenarios that involve cold start. In cold start, the company does not have
much of the user data available to generate recommendations. Therefore,
based on the movies that are watched, Netflix provides recommendations of
the films that share a degree of similarity. And Netflix uses location detactor
to provide their best feeds .
Two main types of Recommendation Systems –
1. Content-based recommendation systems
In a content-based recommendation system, the background knowledge of the products and customer information are
taken into consideration. Based on the content that you have viewed on Netflix, it provides you with similar
suggestions. For example, if you have watched a film that has a sci-fi genre, the content-based recommendation system
will provide you with suggestions for similar films that have the same genre.

2. Collaborative filtering recommendation systems

Unlike the content based filtering that provided recommendations of

similar products, Collaborative Filtering provides recommendations
based on the similar profiles of its users. One key advantage of
collaborative filtering is that it is independent of the product knowledge.
Rather, it relies on the users with a basic assumption that what the users
liked in the past will also like in the future. For example, if a person A
watches crime, sci-fi and thriller genres and B watches sci-fi, thriller and
action genres then A will also like action and B will like crime genre.
 What technical challenges did they face in search service
related to recommendations ?
• The challenges were:
• Unavailability of a video from the perspective of a recommender system.
• Detecting, reporting and substituting the unavailable entities.
• The length of search terms which are usually very short makes it very
hard for Netflix to understand what the user is searching for.
• Understanding user intent, personal preference at any given time,
correlation between users across different accounts.
 • Cold-start Problem

The aged cold-start problem — Netflix has it too. Traditionally, Netflix tries to curb this by obtaining some
user preference information by asking new members to fill up a survey to ‘jump start’ the recommendations. If
this step is skipped, the recommendation engine will then provide a diverse and popular set of titles.

• Also, recently during this Covid-19 period, Netflix Party 

was created and in my opinion, this has massive effects on
curbing this cold-start problem as this data is likely sent back
to Netflix to analyse.

• Simply put, Netflix used to be single-person activity (at least

what can be monitored by Netflix). You could be at home
watching a title alone or with a group of friends, but Netflix
has no idea of who you are watching it with physically.
With Netflix Party, Netflix could potentially create a graph
of who you have interacted with, and potentially perform a
collaborative-filtering like algorithm to do recommendations
to new users as well.
 Data source:
• According to the data sources for the recommendation system of Netflix are:
• A set of several billion ratings from its members. More than a million new ratings are being added every day.
• Stream related data such as the duration, time of playing, type of the device, day of the week and other context-
related information.
• The pattern and the titles that their subscribers add to their queues each day which are millions in number.
• All the metadata related to a title in their catalog such as director, actor, genre, rating and reviews from different
platforms.
• Recently they have added social data of a user so that they can extract social features related to them and their
friends to provide better suggestions.
• The search-related text information by Netflix subscribers or members.
• Apart from internal sources of data they also use external data such as box office information, performance and
critic reviews.
• Other features such as demographics, culture, language, and other temporal data is used in their predictive
models.
 How important is Netflix’s Recommender
System?
• Our recommender system is used on most screens of the Netflix product beyond the homepage, and in
total influences choice for about 80% of hours streamed at Netflix. The remaining 20% comes from
search, which requires its own set of algorithms. Members frequently search for videos, actors, or
genres in our catalog ; they leverage information retrieval and related techniques to find the relevant
videos and display them to our members. However, because members also often search for videos,
actors, or genres that are not in our catalog or for general concepts , even search turns into a
recommendation problem. In such cases, search recommends videos for a given query as alternative
results for a failed search. The extreme crudeness of text input on a TV screen means that interpreting
partial queries of two or three letters in the context of what we know about the searching member’s
taste is also especially important for us.
BUSINESS VALUE:
• Netflix seek to grow his business on an enormous scale, that is, becoming a producer and
distributor of shows and movies with a fully global reach. They develop and use their
recommender system because they believe that it is core to their business for a number of
reasons. the recommender system helps them win moments of truth: when a member starts a
session and they help that member find something engaging within a few seconds, preventing
abandonment of our service for an alternative entertainment option.
• Reduction of monthly payment both increases the lifetime value of an existing subscriber, and
reduces the number of new subscribers they need to acquire to replace cancelled members.
How are Netflix using AI for a positive impact?

• Recommendation systems are means to an end. they try to build models for
recommendations so that we can maximize Netflix member's enjoyment of
the selected item while minimizing the time it takes to find them.
Enjoyment integrated over time i.e. goodness of the item and the length of
view, interaction cost integrated over time i.e. time it takes the member to
find something to play, are some of the factors they consider while building
our ML/AI models for a positive impact on their 100M+ members.
Outcome(what results/answers were achieved?)
• In pandemic:
 Outcome:
• The overall engagement rate by the user with Netflix has increased with the help of the
recommender system. This led to lower cancellation rates and increased streaming hours.
• The monthly churn of their subscribers is very low and most of it is due to the failure in
payment gateway transactions and not due to the customer’s choice to cancel the service.
• Personalization and recommendations save Netflix more than $1Billion per year.
• 75% of the content people watch today is provided by their recommendation system.
• Member satisfaction increased with the development and changes to the recommendation
system.
Business Impact:
shows business results-
• Proportion of orders with recommendations
• Recommended items per order
• Increase in average order value
• Increase in revenue
• Increase in customer retention
• Recommendations vs sold items
In Conclusion:
• Netflix has done a phenomenal job of applying AI, data science, and machine learning the “right way” — using a
product-based approach that focuses on business need first, then AI solution next, rather than the other way around.

• When applied properly, AI can do wonders.

• We’ve seen how effective AI solutions can be in personalizing the experience for the benefit of both Netflix in terms of
subscriptions and users in terms of overall satisfaction.

• Going forward, the integration of AI in society as well as in the corporate enterprise space will continue to become
more and more prevalent Technologists may have a tendency to prescribe existing AI solutions, but really the most
effective way to adopt AI is the way Netflix did — from a business driven perspective first.

• Dig deep and you will see that Netflix generated supporting data before making the strategic move forward.

• the reason for Netflix’s growing popularity is its programmed intuitive nature. From knowing what content to offer to
which user, creating a users profile to provide personalized services to each of them as well as enhancing their
streaming experience and offering a variety of such convenient features.
 • https://medium.com/voice-tech-podcast/a-simple-way-to-expla
in-the-recommendation-engine-in-ai-d1a609f59d97
• https://becominghuman.ai/how-netflix-uses-ai-and-machine-le
arning-a087614630fe
References

• https://dzone.com/articles/is-it-worth-it-roi-of-recommender-s
ystems
• https://towardsdatascience.com/netflix-recommender-system-a
-big-data-case-study-19cfa6d56ff5
• https://www.analyticssteps.com/blogs/using-data-handling-and
-digital-marketing-maximise-customer-experience-netflix-case
-study
Thank you