Project file of business analytics

Submitted to:
Mr.tanveer kajla

Submitted by:
rajni bala(16421140)
surbhi (16421118)
Introduction to company: netflix

Netflix is an American entertainment company founded by Reed

Hastings and Marc Randolph on August 29, 1997, in Scotts Valley,
California. It specializes in and provides streaming media and video-on-
demand online and DVD by mail. In 2013, Netflix expanded
into film and television production, as well as online distribution. As of 2017,
the company has its headquarters in Los Gatos, California.
Netflix's initial business model included DVD sales and rental, although
Hastings jettisoned DVD sales about a year after Netflix's founding to focus on
the DVD rental by mail business. In 2007, Netflix expanded its business with
the introduction of streaming media, while retaining the DVD and Blu-
ray rental service. The company expanded internationally, with streaming
made available to Canada in 2010[9] and continued growing its streaming
service from there; by January 2016, Netflix services operated in over 190
countries.
Netflix entered the content-production industry in 2013, debuting its first
series, House of Cards. It has greatly expanded the production of both film
and television series since then, offering "Netflix Original" content through its
online library of films and television. Netflix released an estimated 126 original
series or films in 2016, more than any other network or cable channel. As of
July 2017, Netflix had 103.95 million subscribers worldwide, including 51.92
million in the United States.
Netflix's headquarters are in 100 Winchester Circle, Los Gatos, California,
USA. They also have other offices in the Netherlands, Brazil, India, Japan and
Korea.
What is business analytics
Business analytics (BA) is the practice of iterative, methodical exploration of
an organization's data, with an emphasis on statistical analysis. Business
analytics is used by companies committed to data-driven decision-making.

BA is used to gain insights that inform business decisions and can be used to
automate and optimize business processes. Data-driven companies treat their
data as a corporate asset and leverage it for a competitive advantage.
Successful business analytics depends on data quality, skilled analysts who
understand the technologies and the business, and an organizational
commitment to data-driven decision-making.

Types of business analytics:

 Descriptive analytics, which tracks key performance indicators to

understand the present state of a business;

 Predictive analytics, which analyzes trend data to assess the likelihood of

future outcomes; and

 Prescriptive analytics, which uses past performance to generate

recommendations about how to handle similar situations in the future.
Products
In 2011, Netflix introduced a Netflix button for certain remote controls, allowing
users to instantly access Netflix on compatible devices.
Netflix revealed a prototype of the new device called "The Switch" at the 2015
World Maker Faire New York. "The Switch" allows Netflix users to turn off
lights when connected to a smart home light system. It also connects to users'
local networks to enable their servers to order takeout, and silence one's
phone at the press of a button. Though the device hasn't been patented,
Netflix released instructions on their website, on how to build it at home (DIY).
The instructions cover both the electrical structure and the programming
processes.
In May 2016, it created a new tool called FAST to determine how fast one's
Internet connection is.

Netflix and business analytics

In 2006 Netflix announced the Netflix Prize, a competition for creating an
algorithm that would “substantially improve the accuracy of predictions about
how much someone is going to enjoy a movie based on their movie
preferences.” There was a winner, which improved the algorithm by 10%.
However, Netflix never did implement the algorithm, saying:

“We evaluated some of the new methods offline but the additional accuracy
gains that we measured did not seem to justify the engineering effort needed
to bring them into a production environment.”

The core job of analytics is to help companies gain insight into their
customers. Then, the companies can optimize their marketing and deliver a
better product. (Without analytics, companies are in the dark about their
customers.) Analytics gives businesses the quantitative data they need to
make better, more informed decisions and improve their services.
So how does Netflix use analytics?

“There are 33 million different versions of Netflix.”

– Joris Evers, Director of Global Communications

At current count, Netflix has 103.95 million worldwide streaming customers.

Having this large user base allows Netflix to gather a tremendous amount of
data. With this data, Netflix can make better decisions and ultimately make
users happier with their service.

Traditional television networks don’t have these kinds of privileges in their

broadcasting. Ratings are just approximations, green-lighting a pilot is based
on tradition and intuition. Netflix has the advantage, because being an internet
company allows Netflix to know their customers well, not just have a “persona”
or “idea” of what their average customer is like. Let’s look at an example.

If you’re watching a series like Arrested Development, Netflix is able to see

(on a large scale) the “completion rate” (for lack of a better term) of users. For
example, the people at Netflix could ask themselves “How many users who
started Arrested Development (from season 1) finished it to the end of season
3?” Then they get an answer. Let’s say it’s 70%.

Then they ask “Where was the common cut off point for users? What did the
other 30% of users do? How big of a ‘time gap’ was there between when
consumers watched one episode and when they watched the next? We need
to get a good idea of the overall engagement of this show.”

They then gather this data and see user trends to understand engagement at
a deep level. If Netflix saw that 70% of users watched all seasons available of
a cancelled show, that may provoke some interest in restarting Arrested
Development. They know there’s a good chance users will watch the new
season.

But the data gets deeper than that. Here’s a look at some of the “events”
Netflix tracks:

When you pause, rewind, or fast forward

What day you watch content (Netflix has found people watch TV shows during
the week and movies during the weekend.)

The date you watch

What time you watch content

Where you watch (zip code)

What device you use to watch (Do you like to use your tablet for TV shows
and your Roku for movies? Do people access the Just for Kids feature more
on their iPads, etc.?)

When you pause and leave content (and if you ever come back)

The ratings given (about 4 million per day)

Searches (about 3 million per day)

Browsing and scrolling behavior

Netflix also looks at data within movies. They take various “screen shots” to
look at “in the moment” characteristics. Netflix has confirmed they know when
the credits start rolling; but there’s far more to it than just that. Some have
figured these characteristics may be the volume, colors, and scenery that help
Netflix find out what users like.

Why does Netflix want to know when the credits roll? They probably want to
see what users do afterward. Do they leave the app or go back to browsing?
Notice how Netflix now offers movie recommendations (they have
personalization algorithms that aim to accurately predict what users will watch
snext) soon after credits start (or, for television shows, they automatically play
the next episode).

Because if users leave the app after watching a show, that may mean they
are more likely to cancel. Allow me to explain:

Through their analytics, Netflix may know how much content users need to
watch in order to be less likely to cancel. For instance, maybe they know “If
we can get each user to watch at least 15 hours of content each month, they
are 75% less likely to cancel. If they drop below 5 hours, there is a 95%
chance they will cancel.”

So now that they have this data, they can ask themselves “How do we help
users watch at least 15 hours of content per month?” One idea: enable post-
play, which automatically plays the next episode of a TV show unless the user
opts out. For movies, show movie suggestions (based on the rating of the
movie just watched) right after the credits start rolling and allow users to press
play right from that screen. Netflix can add this feature to their web and mobile
apps and, again, through analytics, see the results.

This is only a theory of how Netflix came to the decision to implement post-
play and an example of how analytics can help Netflix make decisions. I don’t
have any inside information.So all of this data and the large user base allow
Netflix to quickly see trends and formulate opinions. Later, we’ll get into the
factors that made them green-light House of Cards.

Netflix and big data

From predicting the kind of content that would garner high viewership to
recommending content to specific users, Netflix uses data everywhere. In fact,
since its days of being a DVD-by-mail service Netflix placed prime importance
on collecting user data and building a recommendation system. Cinematch
was the first algorithm behind their recommendation system. After launching
their streaming media service in 2007, it took them 6 years to collect enough
data to predict the sure-shot success of their first original production “House of
Cards”. Netflix set the biggest example of how analytics used in the right
direction can literally spell success for a business, in a domain as
unpredictable as content production.

How Netflix gather and use data?

The user base of Netflix currently stands at 99 million approximately. So, you
can imagine the huge volume of behavioral data that it receives. To collect
this data, they create certain data points known as “events” in the world of Big
Data Analytics. E.g.

 When does a user watch a show

 Where do they watch it
 On which device do they watch
 Do the nature of shows vary with the device
 When do they pause a program
 Do they re-watch any portion of a program
 Do they skip the credits or not
 The ratings
 The searches
Netflix’s data scientists gather all these information and process them to
reveal useful insights. These insights help Netflix in taking almost all of its
business decisions.

Benefits to Netflix
Analytics has given Netflix an edge over all its competitors! In fact, Netflix is
one of the few content generation companies who use data and analytics at
this scale and that too for content production and acquisition. Most of its
competitors use analytics for content promotion. The benefits that it draws
from using analytics are
 It has been able to do away with the concept of pilot episodes. Pilot
episodes are sample episodes for new program concepts. Focus groups
and experts then watch these episodes to determine the show’s chance of
being successful. But since Netflix uses data to analyze the likelihood of a
show’s success, it doesn’t need to shoot pilot episodes. That reduces their
expenditure by a good amount.
 The success rates for Netflix’s original shows are 80% as compared to the
30%-40% success rates of traditional TV shows.
 Using data to target advertisements and recommend shows to specific
users has helped Netflix in lowering its promotional campaign budgets. It
has also helped in providing the user with a more personalized experience.
As they themselves say, about 75% of Netflix’s viewing is driven by the
recommendation algorithm.

conclusion
For a company which works in an out-and-out creative domain like content
generation, it is extremely difficult to make a choice. Sometimes the gut
feeling starts speaking and despite all the data indicating in one direction, you
understand that the content is just not good enough. And, although you can
have all the correct ingredients, the recipe for success is finally dependent on
the cook. So without a good production, no amount of predictive analytics can
save a show. And finally, not every analysis is correct! E.g. Analytics couldn’t
predict that “Breaking Bad” would be as big a success as it was. Using
analytics always helps a business in taking informed decisions. However, data
can’t save a bad idea, it can only validate a good one.