Scientists Challenged to Analyze Dataset of 100 Million Movie Ratings

LOS GATOS, Calif., October 2, 2006 – Netflix, Inc. (Nasdaq: NFLX), the world's largest online movie rental service, today announced the creation of the Netflix Prize, an award of one million dollars to the first person who can achieve certain accuracy goals in recommending movies based on personal preferences. The company also made available to contestants 100 million anonymous movie ratings ranging from one to five stars, the largest such data set ever released.

Netflix said it will publish a detailed description of the winning approach for the benefit of companies, entrepreneurs and academicians.

Recommendation systems help people choose taste-based products by comparing their tastes with similar tastes of other people. Recommendation systems are particularly useful to consumers of movies, books, music, clothing and entertainment.

"Recommendation systems covering a wide variety of categories will play an increasingly significant commercial role in the future," said Netflix Co-Founder, Chairman and CEO Reed Hastings. "Right now, we're driving the Model T version of what is possible. We want to build a Ferrari and establishing the Netflix Prize is a first step."

The threshold required to win the Netflix Prize is a 10 percent improvement in accuracy over the current Netflix recommendation system. If no one wins the grand prize this year, the company said it will award a $50,000 progress prize to whoever makes the most significant advancement toward the goal and will award a progress prize annually until someone wins the grand prize.

Complete details for registering and competing for the Netflix Prize are available at www.netflixprize.com.

In creating the Netflix Prize, the company said it was inspired by the unconventional approach used to win the Longitude Prize, which was created in 1714 by the British government to focus on one of the most vexing and dangerous aspects of transoceanic travel – determining a ship's longitude. The prize was won in 1761 by John Harrison, who rather than focusing on star maps created a clock precise enough to accurately keep the time of the ship's home port and allowed navigators to use local time as measured by the height of the sun to calculate longitude within a half degree. The movie "Longitude" tells this story and is available at Netflix.

The Netflix Prize competition is open to anyone except Netflix employees, their families, and company affiliates. The company is inviting individual computer scientists and corporate or university teams well versed in the complexities of machine learning to pursue the prize. A board of judges, including senior engineers at Netflix and well-known members of the machine learning community, will determine the grand prize or annual progress prize winners.

All personal information identifying individual Netflix customers has been removed from the prize data. It contains only movie titles, star ratings and dates but no text reviews.

A recommendation engine spanning the 65,000 titles in the Netflix catalog is an essential element of the company's movie subscription service. Each of Netflix's more than five million members enjoys a personalized member Web site that enables them to rate movies on a one to five star scale. Netflix pours those individual ratings into a database of more than one billion movie ratings and relies on proprietary algorithms and software to identify movies that tend to be rated highly (or lowly) by people with similar tastes. The accuracy of this software has been praised by movie critics and members alike and enables Netflix to fulfill its goal of connecting people with movies they'll love.

About Netflix
Netflix (Nasdaq: NFLX) is the world's largest online movie rental service, providing more than five million subscribers access to over 65,000 DVD titles. The company offers a variety of subscription plans, starting at $5.99 a month. There are no due dates, no late fees and no shipping fees. DVDs are delivered for free by the USPS from regional shipping centers located throughout the United States. Netflix can reach more than 90 percent of its subscribers with generally one business-day delivery. Netflix offers personalized movie recommendations to its members and has more than one billion movie ratings. Netflix also allows members to share and recommend movies to one another through its FriendsSM feature. For more information, visit www.netflix.com