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Netflix paid $1 million for algorithm it never used

You can chalk up this gaffe as money not very well spent.

In an open competition held in 2006, the brass at Netflix challenged participants to create a collaborative filtering algorithm that would "best predict whether or not a user would like a particular film or TV show based on previous ratings," reports BGR.

A team by the name of "BellKor's Pragmatic Chaos" claimed the $1 million grand prize in 2009, as their algorithm proved to be 10% more effective than the recommendation service Netflix used at the time.

Only Netflix never implemented the team's award-winning solution, a revelation that may shed a little light on the company's debatable business practices.

"We evaluated some of the new methods offline but the additional accuracy gains that we measured did not seem to justify the engineering effort needed to bring them into a production environment," Netflix shared in a recent blog post. "Also, our focus on improving Netflix personalization had shifted to the next level by then."

The company adds that because the bulk of Netflix users preferred streaming videos over renting DVDs, integrating the team's algorithm into the recommendation service didn't seem logical.

"One of the reasons our focus in the recommendation algorithms has changed is because Netflix as a whole has changed dramatically in the last few years," the company stated in the blog post. "Netflix launched an instant streaming service in 2007, one year after the Netflix Prize began. 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."

According to Rocco Pendola from The Street.com, we can expect Netflix to sell its DVD division in the near future.

(Screengrab BGR)