Netflix has 301.6 million users in over 190 countries. But it's not just a place to watch shows anymore. It's really a company that collects information about what people watch.
Think about how you use Netflix.
Every time you click play, pause, go back, or skip a show, Netflix is watching what you do. The company tracks billions of actions from users every single day.
Netflix uses all this information plus quick testing to become one of the biggest entertainment companies in the world.
Today, we'll learn how Netflix uses AI to:
Show you content you'll like
Decide which new shows to make
Make sure videos play smoothly without stopping
Data has been Netflix’s foundation since Day 1
Netflix has loved collecting data long before AI became popular.
Remember when Netflix used to mail DVDs to your home? Even back then, they kept track of which movies you rented, how long you kept them, and what ratings you gave them.
When Netflix started streaming in 2007 (they called it "Watch Now"), they began collecting much more information. Today, Netflix tracks:
What you watch
When you stop watching
Which show pictures you click on
Whether you watch many episodes at once or one at a time
This information about what people do helps Netflix's AI work well. Just like how Starbucks uses its app to learn what customers like, Netflix built its whole business on knowing what you want to watch—sometimes before you know it yourself.
Three Effective Ways Netflix Uses AI in Business
1/ Netflix creates a special homepage just for you
More than 80% of what people watch on Netflix comes from suggestions, not from searching.
Most of us open Netflix, look around for 90 seconds, and then switch to another app or YouTube if we don't find anything interesting. Netflix knows this, so they use AI to help you find something you'll like quickly.
But there's more.
Netflix doesn't just pick which shows to suggest. They also decide how to show them to you.
The same show gets different cover images for different people. For example, with the show "House of Cards":
People who like movies with strong women see pictures of Robin Wright
People who watch political dramas see pictures of Kevin Spacey
Netflix tests these images with millions of users. Changing the images, descriptions, and trailers for each person increased clicks by about 30%.
The homepage you see is made just for you. No two Netflix users see the exact same thing. This personal touch saves Netflix over $1 billion every year by keeping people from canceling their subscriptions.
2/ Netflix decides which shows to make based on what's popular and what worked before
Netflix spends about $17 billion on making shows and movies every year, so choosing the right ones is very important.
Before "Squid Game" became Netflix's biggest show ever, their data showed that people around the world were interested in Korean content. They decided to make the show based on this information, and people watched it for 1.65 billion hours in the first 28 days.
"Stranger Things" has a similar story. Netflix's data showed people liked 1980s nostalgia and science fiction. The show got 14.07 million viewers in its first week.
We think this method has pros and cons. In art, some shows break all the rules and patterns but still become huge hits.
Using AI to decide which shows to make might not always be the best choice, but the data can at least show which shows will probably fail.
Netflix recently started using AI to actually make shows.
In "The Eternaut," an Argentine sci-fi series, they used AI to create a building collapse scene. It was made faster than using traditional special effects. For "Happy Gilmore 2," Netflix used AI to make characters look younger.
3/ How Netflix (almost always) makes sure your videos play smoothly without stopping
Netflix knows that people hate when videos keep pausing to load, and it's bad for business. To fix this, Netflix created its own content delivery system called Open Connect.
Most streaming services use other companies' delivery systems. Netflix built their own. They put storage servers inside internet providers' buildings around the world. This means your shows stream from a server that's physically close to you.
Think of it like warehouses. Your package arrives faster if the warehouse is in your city instead of far away.
Netflix delivers all its content using Open Connect. That's over 250 million hours of videos every day.
This system works with AI to:
Adjust video quality based on your internet speed
Guess which shows you'll watch next and load them ahead of time
Make each scene look its best while using less data
Netflix runs AI agents across its business
Among many use cases, Netflix runs agents that act autonomously and share data with each other to improve the platform overall.
What's Next for Netflix?
Netflix will keep using AI to help make shows, especially for special effects and planning scenes before filming.
They created clear rules about how to use AI and what not to use it for. This makes sure AI helps creative people do their jobs better, instead of replacing them.
Netflix's system for suggesting shows will get even better at showing you content you'll enjoy. They keep testing and trying new things.
The company made 17% more money than last year—$11.5 billion in the third quarter of 2025. With this success, they'll keep investing more in AI.
The competition between streaming companies isn't over yet. But Netflix's advantage with data and AI technology gives them a big lead that other companies will find hard to catch up to.
