Online Analytics in Action: Netflix - what were they thinking?
In October 2006, Netflix announced that they will pay anyone $1Million if they can improve the accuracy of their customers' suggested interest rankings (http://www.netflixprize.com/). Why? Netflix realized that if they could improve their accuracy by 10% it would be worth well over $1Million annually to the company through improving communication relevance through well targeted online movie suggestions.
Their internal scientific team had plateaued in mid-2006 so why not lay down the gauntlet and let the best-of-the-best of the educational and commercial scientist community take a shot. It’s been 2 years, with over 30K entrants from the best minds in the world including teams from MIT, Stanford & Harvard, yet no one has won, but they are getting close (current score improvement = 9.44%) …. And, in the interim, Netflix has paid interim prizes and implemented the resulting solutions so it’s a win-win.
Strangely enough, cult and independent type movies such as Best in Show , Napoleon Dynamite & Kill Bill are making it very difficult to make significant improvements recently as these type of movies are very difficult to classify based on previous known behavior in the available data.
Additional detail in this recent article published in the NY Times: http://www.iht.com/articles/2008/11/21/technology/23netflixt.php?page=1
We now have a client that has a very similar business issue. My next blog will focus on that situation with a call for help on how we can improve on their current ‘interest assignment’ system.
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