Netflix offers prize

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SCOTT JAGOW: Alright, let's stick with prizes starting with the letter "N" please. Today, a certain online DVD company unveils the Netflix Prize. The winner gets $1 million. First, ya gotta come up with a better software program for recommending movies. More now from Hillary Wicai.


HILLARY WICAI: You log onto Netlix and your account says based on your recent rental of Syriana, you might also like Good Night and Good Luck.

Well, it doesn't take a George Cooney genius to figure that one out, so Netlix wants to make its recommendation software even better. And it's counting on some brilliant and perhaps unknown computer geeks who'd like to win a million bucks to help the company out.

Analyst Josh Bernoff at Forrester Research says better recommendations will generate loyalty.

JOSH BERNOFF:"It would be really nice if every month or two something surprising happened that you said wow I really love this service. After you've seen the movies you knew you really wanted to see, unless they come up with a whole bunch of other suggestions you may say 'well wait a minute, this isn't worth it to be sitting here waiting for movies every month.'"

The contest begins today. The winning software must improve the accuracy of Netflix's current recommendation system by at least 10 percent.

I'm Hillary Wicai for Marketplace.

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