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Everything is a Recommendation
We have discovered through the years that there is tremendous value to our subscribers in incorporating recommendations to personalize as much of Netflix as possible. Personalization starts on our homepage, which consists of groups of videos arranged in horizontal rows. Each row has a title that conveys the intended meaningful connection between the videos in that group. Most of our personalization is based on the way we select rows, how we determine what items to include in them, and in what order to place those items.
Take
as a first example the Top 10 row: this is our best guess at the ten
titles you are most likely to enjoy. Of course, when we say ?you?, we
really mean everyone in your household. It is important to keep
in mind that Netflix? personalization is intended to handle a household
that is likely to have different people with different tastes. That is
why when you see your Top10, you are likely to discover items for dad,
mom, the kids, or the whole family. Even for a single person household
we want to appeal to your range of interests and moods. To achieve
this, in many parts of our system we are not only optimizing for
accuracy, but also for diversity.
Another important element in Netflix? personalization is awareness.
We want members to be aware of how we are adapting to their tastes.
This not only promotes trust in the system, but encourages members to
give feedback that will result in better recommendations. A different
way of promoting trust with the personalization component is to provide explanations
as to why we decide to recommend a given movie or show. We are not
recommending it because it suits our business needs, but because it
matches the information we have from you: your explicit taste
preferences and ratings, your viewing history, or even your friends?
recommendations.
On the topic of friends, we recently released
our Facebook connect feature in 46 out of the 47 countries we operate ?
all but the US because of concerns with the VPPA law. Knowing about
your friends not only gives us another signal to use in our
personalization algorithms, but it also allows for different rows that
rely mostly on your social circle to generate recommendations. 
Some of the most recognizable personalization in our service is the collection of ?genre?
rows. These range from familiar high-level categories like "Comedies"
and "Dramas" to highly tailored slices such as "Imaginative Time Travel
Movies from the 1980s". Each row represents 3 layers of
personalization: the choice of genre itself, the subset of titles
selected within that genre, and the ranking of those titles. Members
connect with these rows so well that we measure an increase in member
retention by placing the most tailored rows higher on the page instead
of lower. As with other personalization elements, freshness and diversity is taken into account when deciding what genres to show from the thousands possible.
We
present an explanation for the choice of rows using a member?s
implicit genre preferences ? recent plays, ratings, and other
interactions --, or explicit feedback provided through our taste
preferences survey. We will also invite members to focus a row with
additional explicit preference feedback when this is lacking. 
Similarity
is also an important source of personalization in our service. We
think of similarity in a very broad sense; it can be between movies or
between members, and can be in multiple dimensions such as metadata,
ratings, or viewing data. Furthermore, these similarities can be
blended and used as features in other models. Similarity is used in
multiple contexts, for example in response to a member's action such as
searching or adding a title to the queue. It is also used to generate
rows of ?adhoc genres? based on similarity to titles that a member has
interacted with recently. If you are interested in a more in-depth
description of the architecture of the similarity system, you can read
about it in this past post on the blog. 

In most of the previous contexts ? be it in the Top10 row, the genres, or the similars ? ranking, the choice of what order to place the items in a row, is critical in providing an effective personalized experience. The goal of our ranking system is to find the best possible ordering of a set of items for a member, within a specific context, in real-time. We decompose ranking into scoring, sorting, and filtering sets of movies for presentation to a member. Our business objective is to maximize member satisfaction and month-to-month subscription retention, which correlates well with maximizing consumption of video content. We therefore optimize our algorithms to give the highest scores to titles that a member is most likely to play and enjoy.
Now it is clear that the Netflix Prize objective, accurate prediction of a movie's rating, is just one of the many components of an effective recommendation system that optimizes our members enjoyment. We also need to take into account factors such as context, title popularity, interest, evidence, novelty, diversity, and freshness. Supporting all the different contexts in which we want to make recommendations requires a range of algorithms that are tuned to the needs of those contexts. In the next part of this post, we will talk in more detail about the ranking problem. We will also dive into the data and models that make all the above possible and discuss our approach to innovating in this space.
there's more here:
http://techblog.netflix.com/2012/04/netflix-recommendations-beyond-5-stars.html

