29 July 2009 • 7:00 am

Competition and Collaboration from Netflix

Netflix prize web page

Netflix prize web page

The Tortoise’s fascination with Netflix was enhanced with the news yesterday that Netflix’s public competition to improve the effectiveness of its recommendation system has drawn to a close with two teams essentially tied for the prize. But each of the two teams are actually consortia; teams comprised of other teams. Netflix has harnessed the power of competition and collaboration to solve a challenging business problem.

Subscribers to Netflix are asked to rate (on a scale from one to five stars) each movie they’ve rented, and are even able to rate movies seen in theatres or elsewhere. The data base of millions of individual ratings are used to predict and recommend movies to individual subscribers. The system works pretty well; around two thirds of all rental decisions made by Netflix subscribers are the result of a computer-generated recommendation.