Monday, May 14, 2012

Now Showing (on the Small Screen): Netflix Customer Analytics

Netflix built its DVDs by mail business by combining a convenient hassle-free movie service with a movie recommendation system.  The original recommendation system, Cinematch, which relied on movie rental history and user ratings of movies, was somewhat limited due to a lack of data.  It was modestly successful, however, and helped Netflix establish itself as a leading online movie rental house. Netflix always knew that Cinematch needed to improve and attempted a crowdsourced competition in 2006 to improve the system.  The contest ended three years later with a 10% improvement in movie recommendations.  Since then Netflix has dramatically expanded its online streaming service, which allows it to capture a whole new set of data points on users' actual viewing of movies.  For example, did a user watch the whole movie or did they stop it after 5 minutes?  The expanded data set improves Cinematch's accuracy.  Improving Cinematch's accuracy is crucial to Netflix's future, not only to compete with other online streaming services, but because a smart recommendation system can direct users to content Netflix already owns thereby limiting content licensing fees.

Read the article.

(submitted by Walter)

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