
The Worth of Recommendation Engines - getp
http://kk.org/ct2/2008/06/the-worth-of-recommendation-en.php
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michael_dorfman
_"In other words, the recommendation technology at Netflix -- the softwares
that says: based on your past ratings of movies you should like this new one
-- will spur rentals as if it were a film earning at least $1 million at the
box office."_

In other words, I am going to take an off-the-cuff statement with an absurdly
round number, and treat it if it were actually fact.

 _"Let's say that increase in DVD usage amounts to 10% of total sales. That's
a lift of $100,000 per film on average."_

Let's add a few more hypothetical assumptions, with no basis in reality.

 _"Netflix currently offers 70,000 films. That means that Netflix's
recommendation engine is worth about $7 billion to the film industry."_

Now, we take our one hypothetical case, and pretend it were a law applied to
all films. Voila! Now we've got our outrageous conclusion. QED.

Kids: don't try this at home.

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kurtosis
I think he took the quote of a netflix guy saying that they can make "some"
movies perform like they were doing $1M at the box office to mean that they
can make all 70,000 movies earn $100,000 in rentals. I find this hard to
believe. This means they can make $100,000 renting, for example, Seamless
which has an average rating of 1.535 stars.

All of hollywood did no more than $10 B last year at the box office - I
suspect all revenue is no more than $50 B.

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swombat
Very hand-waving maths... With that kind of rigorous mathematical model you
could also prove that Microsoft is worth more than the entire world economy.

Calculations in terms of fictitious dollars are rarely useful for anything
other than getting yourself excited.

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dbreunig
Wouldn't it be easier to push a rental if it _didn't_ do amazing at the box
office. The odds that people haven't seen it yet are much better.

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redorb
$7b , a recommendation engine for everything (telecom, cable, cellphone etc..)
service that was near perfect would still only be worth what someone is
willing to pay for.

I think recommendation is at a place where "Good enough" keeps them from
making huge acquisitions.

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jonnytran
Where is this person getting "10% of total sales"? Sounds like an overestimate
to me. I personally don't use the ratings or recommendations on Netflix.

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chwolfe
Does anyone have experience with recommendation services like MyBuys?

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schtog
interesting. i am working on the netflixchallenge myself.

