An excerpt on Netflix personalization and recommendations:
The personalization of their site is really what makes their service so unique. At this point Netflix has now collected over 1 billion ratings for moves. They use these ratings to make recommendations of long tail content for their consumers.Personalization aids discovery in the long tail, pushing consumer demand into the back catalog.
[McCarthy said,] "We help you find movies you've never heard of ... There were 554 movies released theatrically last year and I bet most of us can't name 20. A lot of those movies you would enjoy, if you knew that they existed. If you don't know that they existed then they might as well have not been invented."
He later goes on to compare this approach with Blockbuster.
"Historically Blockbuster has reported that about 90% of the movies they rent are new theatrical releases ... They have a slightly different mix online ... 70% of what they rent online is new releases and about 30% is back catalog."
"About 30% of what we rent is new releases and about 70% is back catalog and it's not because we have a different subscriber. It's because we create demand for content and we help you find great movies that you'll really like, we do it algorithmically and we do it with recommendations and ratings."
Personalization surfaces interesting items you didn't know about and wouldn't have found on your own. It's a complement to search. Search helps when you know what you want. Personalization helps when you don't know what's out there.