How do you select what to watch on Netflix? According to new data from the company, approximately 75 percent of what people select is based on recommendations from Netflix.
"We reached this point by continuously optimizing the member experience and have measured significant gains in member satisfaction whenever we improved the personalization for our members," Netflix said in a recent blog post.
Netflix's recommendation efforts date back to 2006, when the company first announced the $1 million Netflix Prize for anyone who could improve its recommendation engine by 10 percent. In Sept. 2009, the award went to a team of software and electrical engineers, statisticians, and machine learning researchers from Austria, Canada, Israel, and the United States.
Several months later, Netflix ditched plans for a sequel to the prize as part of a lawsuit settlement regarding the use of members' personal information.
Despite the setback, however, recommendation efforts continued and evolved as Netflix shifted its focus from DVDs to streaming.
"Streaming has not only changed the way our members interact with the service, but also the type of data available to use in our algorithms," Netflix's Xavier Amatriain and Justin Basilico wrote in the blog post.
DVDs essentially offered no feedback, but streaming provided more data about consumer habits - did you watch that video in its entirety or click off after five minutes? As Netflix's Watch Instantly expanded to more devices - from Roku to the Xbox to the iPhone - more and more people used the service, providing more feedback.
With the addition of Canada, Latin America, and the U.K. over the past few years, Netflix now has more than 23 million subscribers in 47 countries. "Every day they add 2 million movies and TV shows to the queue and generate 4 million ratings," Netflix said.
What does Netflix consider when offering up recommendations? First, the company considers the household as a whole. "That is why when you see your Top 10, you are likely to discover items for dad, mom, the kids, or the whole family," Netflix said. "Even for a single person household we want to appeal to your range of interests and moods."
Netflix said it also tries to inform users that it's adapting to their tastes by providing explanations about why certain videos were recommended. "We are not recommending it because it suits our business needs, but because it matches the information we have from you," Netflix said.
Recommendations could be improved even more in the U.S. if Netflix were able to link up to Facebook. "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," Netflix said.
But an antiquated law - the Video Privacy Protection Act (VPPA) - limits how much people can share about their video rental and viewing history. Given that the Netflix app automatically shares what its members are watching via Watch Instantly, it could run afoul of the VPPA, so Netflix has held off on Facebook implementation in the U.S. Meanwhile, Congress is currently exploring update options to the VPPA.
On that front, Politico reports that the company has jumped into the political arena with the formation of its own PAC. Dubbed FLIXPAC, the committee is allowed to make direct contributions of up to $5,000 to federal candidates.
For more from Chloe, follow her on Twitter @ChloeAlbanesius.
