Netflix Offers $1 Million Prize

by Mary Ann Romans | More from this Blogger

14 Nov 2007 05:18 AM

What happens when the number one DVD rental company isn't happy with being twice as popular? The company decides to sponsor a contest for improvment.

The movie rental virtual store Netflk uses a complicated system of algorithms and other software coding to offer recommendations of new movies to its customers, based on preferences and what those customers have rented in the past. But Netfliks wants to gain even more market share by improving upon that system, and the DVD giant is offering a $1 million prize to anyone who could improve upon that system by at least 10 percent.

Thousands of engineers, statisticians, math geniuses and software developers have taken on that challenge. There are 127,000 participants, to be almost exact, with 160 countries represented.

To keep the masses motivated, Netflix is also offering "progress" prizes to the team that comes the closest in any given year. The progress prize is a check of $50,000. The first check goes to a three-person team at AT&T who managed to increase the system by 8.5 percent. Team members are: Yehuda Koren, Robert Bell and Chris Volinsky. Because the team mostly worked on the system as part of their jobs, the prize money was awarded to AT&T as a company. AT&T is donating the money to charity. The team spent more than 2,000 hours on the project.

Netflix will use some of the team's findings to improve the system starting early next year. The At&T team will release all to other researchers in the hope that others will be able to use that research as a base for further improvement in the Netflix movie recommendation system.

Netflix reported more than 7 million subscribers at the end of September. Rival, Blockbuster reported a total of 3.1 million online subscribers.

Mary Ann Romans writes about everything related to saving money in the Frugal Blog, technology in the Computing Blog, and creating a home in the Home Blog. You can read more of her articles by clicking here.

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Mary Ann Romans is a freelance writer, wife and mother of three children. She lives in Pennsylvania with her husband, the kids and a 16-pound cat.

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