Netflix's recommendation algorithm was born from a $1M competition

Netflix, explained

From offering an internet-based, mail-order Blockbuster alternative to its eventual status as a market leader in streaming entertainment, Netflix has led nearly every major paradigm shift in the television and movie business since its inception.

Netflix's original movies are designed to play in the background, appealing to audiences who watch them passively, often while doing chores or looking at their phones.

YouTube's recommendation algorithm relies on over 80 billion daily pieces of information

These signals include which videos a user has watched, searched for, and liked, as well as channel subscriptions and feedback selections, such as videos marked "not interested." Each user's viewing habits are compared with those of other users with similar habits, and this information is used to suggest additional content.

Netflix positioned itself as a logical alternative to movie rentals

At its inception, Netflix disrupted the entertainment industry, in particular the movie rental business, by mass mailing DVDs to customers who made selections online. That brand is evident in this 2004 commercial.

How Netflix battled Blockbuster

The most consequential business stories involve intense rivalries. The story of Netflix versus Blockbuster is one of those: an agile upstart versus an entrenched incumbent. This nine-part podcast explores the key strategies and pivotal moments in the rivalry that upended the entertainment business, setting the stage for the streaming wars.

Netflix started in 1997 as a mail-order DVD rental service

The first Netflix customers selected DVDs from the company’s website and received and returned them through regular mail. The approach included no late fees and quickly added the ability to rent an unlimited number of DVDs for a flat monthly fee, with the company passing 1 million subscribers in 2003.

A 2002 profile of unprofitable Netflix as it bet on a subscription model

The streaming behemoth saw the potential in subscriptions early, and in this 2002 profile CEO Reed Hastings was already talking about plans to offer "downloadable" movies. The profile serves as a historical artifact confirming the startup's risky bets and showcases the contingent factors that led to its success. (Some users may experience a paywall.)

How Netflix changed TV

In April 2017, Netflix reached 100 million subscribers worldwide—a figure that hit 300 million by 2025. With 50 million in the US alone, it has revolutionized the way people consume entertainment. Newsweek takes a look into the company's history and how it became the dominant force in entertainment.

Netflix is the dominant streaming service

As of 2025, Netflix had amassed more than 300 million subscribers globally and saw quarterly revenue over $11B.

HBO inspired Netflix and vice versa

Netflix's pivot towards original, prestige content would not have been possible if HBO had not blazed that trail decades earlier. Ironically, HBO later used Netflix as a business model when reinventing itself as a streaming app.

Contrary to popular belief, Netflix didn't kill Blockbuster, though it did intentionally position itself as an alternative to the movie-rental store.

Netflix has sometimes struggled with technical aspects of live-streaming

Anne Aaron, Netflix’s senior encoding tech director, spent a decade improving how Netflix streams its content. Then came the challenges of live events. Netflix has experimented with live content like stand-up comedy and sporting events. In this interview with The Verge, Aaron walks through the associated technical and coding challenges.

Algorithms can be designed to train themselves and self-improve without human input, to the point where the optimized code is too complex for programmers to understand.

Amazon is both a vendor for Netflix, via its cloud-computing arm, and its rival

Amazon's Prime Video is a subscription streaming service that includes a variety of original shows and movies for free with a paid Prime membership. This Rotten Tomatoes ranking details 100 of the best Prime Video shows available to watch, including the dramas “Fleabag” and “The Boys.”

The platform's ease of use relies on a complex architecture

Hitting "play" on Netflix is easy, but it triggers a multistep process that fetches the selected content, converts it for your screen, and finds the closest server to deliver it in the highest quality.

Remove the tyranny of choice and quickly generate a movie suggestion with this site.

Netflix's 'Kaleidoscope' experimented with non-linear storytelling

Netflix has regularly experimented with how it releases episodes, but its miniseries "Kaleidoscope" experimented with linear storytelling by crafting a show that supposedly allowed viewers to enjoy the show in any order they pleased.

The 2022 best picture winner, 'CODA,' was an Apple+ original

Streaming has changed more than how we watch movies—it's changed the way we recognize them during awards season. When movie theaters shut down during the early days of the pandemic, studios had no choice but to release their films on streaming. Once the shift occurred, there was no going back.

Netflix's 'KPop Demon Hunters' is the streamer's most-watched original movie

The 2025 film, which combines K-pop music and Korean mythology, became a big hit on the streaming platform. It was equally successful in its limited theatrical release, shooting to the top of the box office rankings.

Streaming service Netflix's sound logo 'Tudum' was designed as a key sonic differentiator.

Facebook's algorithm chooses content to display on the News Feed based on user data

It employs machine learning to prioritize posts and ads based on user interactions, content type, and post timeliness, creating a personalized, engaging experience for each user.

The world's top streaming services (by subscriber count)

With almost 270 million paying users, Netflix is the dominant force in streaming entertainment. But after enjoying a first-mover advantage for years, competitors are beginning to catch up. Most notable is Amazon, which leverages its Prime subscriptions to bundle Prime Video, and has amassed an estimated 200 million users. See an updated tracker of the world's biggest platforms by audience.

In recent years, Netflix has shifted away from scripted originals toward low-cost reality programming.

Why TikTok's algorithm is likely driven by what you linger on

While the inner workings of the engine driving the vast majority of the app's engagement remain a secret, it is understood to rely heavily on what content users spend the most time watching rather than swipe past. Experts believe the app can develop user profiles robust enough for its algorithm to consistently match engaging content to in as little as two hours.

The streamer no longer just offers TV and movies

As a means of keeping existing subscribers engaged, and to add new users on the margins, the streaming service began releasing its own original video games. Many are based on existing Netflix titles and franchises. See their current offerings here.

The first social media platforms date back to the late 1990s, and their algorithms were typically chronological, with entities like MySpace and Facebook feeding users content from the most recent posts to the oldest.

Most of Netflix's subscribers are outside the US

Accordingly, each year, Netflix releases an expansive slate of international shows and movies to subscribers worldwide, including hits that crossed over to the US, like "Squid Game."

Learn how the algorithms behind Tinder, Bumble, Hinge, and other dating apps work

Formerly based on the Elo rating system, which ranks chess players, the Tinder algorithm is built on user data, with more time spent on the app providing more data on user preferences from which to customize potential matches. OkCupid's match percentage algorithm relies on overlaps in users' search preferences and responses to a subset of over 4,000 questions.

How the YouTube algorithm works, according to MrBeast

In this brief interview clip, the YouTube savant "MrBeast" summarizes how the YouTube algorithm—which he relies on to make his content go viral—actually works.

Social media platforms benefit not just from ensuring they have satisfied users, but also from the personal data they scoop up and can then sell to online advertisers.

TikTok's personalized algorithm activates the brain's reward system

A 2025 Washington Post study found that 75% of the TikTok users it studied nearly doubled their time spent on the app within a month. Experts in design and psychiatry say this is due to the app's interface and algorithm, which, after learning about the user's preferences, recommend videos more likely to activate that person's dopamine reward system than non-personalized suggestions.

The 'second screen' effect has realigned the writing for Netflix's original shows

As more subscribers put Netflix on in the background, the company has encouraged more expositional dialogue in its original scripts. Filmmaker Justine Bateman claims the streamer doesn't "want anything on your show to distract [viewers] from their primary screen."

Smart pricing algorithms can unintentionally work together to raise prices

Researchers have found that, through trial and error, algorithms designed to adjust prices based on market data can learn to mimic price-fixing tactics, even without explicit programming to do so. Over time, they "learn" that it is more profitable to avoid price wars and keep prices high when competitors lower prices.

The company's success is often credited to cofounder Reed Hastings

Hastings advocates management philosophies like radical candor, agility, and a hands-off approach to high-performing employees. He stepped down as CEO in 2023 but remains Netflix's chairman.

In high school, Mark Zuckerberg rejected Microsoft's proposal to buy his music suggestion software for $950K

Mark Zuckerberg and Adam D'Angleo built a website called "Synapse," which created playlists for users based on their listening preferences and an algorithm to suggest new songs, in September 2002.

The 2011 film 'Moneyball' shifted ideas about sports and statistics

Based on the Michael Lewis book of the same name, the film starring Brad Pitt depicts the attempts of the 2002 Oakland A's to leverage data analysis to overcome their low-budget woes ($41M) and compete with big-budget teams like the New York Yankees ($125M). Other sports and leagues, including the NBA and NFL, would adopt a similar logic: find what the market undervalues and exploit it.

The real restaurant behind Netflix's ‘Nonnas’

The Netflix movie "Nonna's" tells the story of a restaurant whose kitchen is staffed by grandmothers. While that might sound like an outlandish premise, it's based on a true story. This Time story goes behind the scenes of Enoteca Maria, the 35-seat restaurant on Staten Island that inspired the film.

A Netflix docuseries turned the sport into a national obsession

Throughout much of its history, Formula 1 racing was a European sport that failed to ever find a major audience in the US. That changed with "Drive to Survive," the Netflix docuseries that premiered in 2019. This analysis from two communications professors unpacks how the series has successfully presented the sport for an American audience and cultivated a dedicated fanbase in the process.

YouTube brought endless content—and endless culture wars

How did YouTube grow from a startup in 2005, to a media powerhouse with more than 2.5 billion monthly logged-in users who watch more than 1 billion hours of video every day? That’s what this podcast interview with Bloomberg tech reporter Mark Bergen on NPR’s Fresh Air explores.

YouTube occupies more US screen time than Netflix

As consumers continue to shift their viewing activity away from traditional cable and broadcast TV, they’re spending an increasing amount of time streaming content, much of it on YouTube. In fact, Nielsen data from August 2025, shows that YouTube accounted for 13.1% of US screen time, compared to Netflix’s 8.7%.

Reels have strongly influenced NASCAR’s social media strategy

With viewership and attendance tanking from 2008 to 2018, NASCAR knew it needed better marketing to reach the next generation of fans, so it designed a new social media and content creation strategy. Using these new methods, it achieved 27% follower growth in three years.

Google began as a Stanford University dorm room project

Launched in 1998, Google revolutionized search engines with its clean design and PageRank algorithm. As of 2025, Google has about 90% of the search market share but faces new challenges from AI-powered competitors and regulatory scrutiny.

Visualizing Hollywood's flops and winners in 2023

Is the movie worth watching? See how this year's cinematic releases compare with one another by revenue and popularity with this simple chart. Hollywood movies can be ranked on two axes: their popular rating and total revenues earned. In this data...

Letterboxd, the social media app for movie reviews, was named one of Time's 100 most influential companies of 2026.

Bias can manifest in algorithmic decisions because the program follows rules that may have been written by individuals unaware of their own biases.

Nollywood is Nigeria's booming film industry

With storytelling roots in the Yoruba tradition of traveling theater troupes, Nollywood has slowly expanded its influence—and the world is taking notice. Over the last decade, Netflix invested more than $23M in the Nigerian film industry.

In 2024, Meta launched an AI video generator to create or edit videos through prompts

The tool puts the Meta in direct competition with OpenAI and Google as more companies are investing billions of dollars to capitalize on the explosion of public interest in machine learning and generative media technologies.

Google Search incorporated AI Overviews in 2024 to fight back competitors

Analysts believe that generative AI tools—not antitrust rulings—are Google's biggest threat because they draw users away from traditional search and potential ad revenue. AI partnerships, like the one between Apple and OpenAI, may further reduce Google's market share.

YouTube plans on embracing AI-powered features

YouTube CEO Neal Mohan lays out a series of priorities and predictions for how the online video giant will continue to evolve. Mohan says the company wants AI to play a bigger role—in addition to figuring out how YouTube can evolve and improve the experience of streaming its content.

DeepSeek is a Chinese AI startup that rattled US competitors when it made an AI model much faster and cheaper than they did

DeepSeek unveiled an AI model in 2025 that it said was made in two months for roughly $6M. For context, OpenAI has suggested it took over $100M to make its AI model GPT-4. The news rattled the stocks of American tech companies, including leading chipmaker Nvidia.