Mail Order Is Far

Remember the Netflix Prize? Turns out, Netflix didn’t make must use of the winning method, because the prize was based on dvd rental data, and their customers now stream movies more; dvds tend to be chosen more in far mode, while streaming movies are chosen more in near mode:

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. For DVDs our goal is to help people fill their queue with titles to receive in the mail over the coming days and weeks; selection is distant in time from viewing, people select carefully because exchanging a DVD for another takes more than a day, and we get no feedback during viewing. For streaming members are looking for something great to watch right now; they can sample a few videos before settling on one, they can consume several in one session, and we can observe viewing statistics such as whether a video was watched fully or only partially. …

when people rent a movie that won’t arrive for a few days, they’re making a bet on what they want at some future point. And, people tend to have a more… optimistic viewpoint of their future selves. That is, they may be willing to rent, say, an “artsy” movie that won’t show up for a few days, feeling that they’ll be in the mood to watch it a few days (weeks?) in the future, knowing they’re not in the mood immediately. But when the choice is immediate, they deal with their present selves, and that choice can be quite different. (more; HT Carl Shulman)

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  • Douglas Knight

    Masnick’s introspection says that mail order is far. There’s nothing wrong with introspection, but because he quotes Netflix, lots of people seem to think Netflix provided some evidence for this claim.

  • Steven

    I agree with Douglas — Netflix neither asserted nor provided evidence that mail order is far. All they said is that mail order is different, and their announcement suggests that the difference has more to do with risk aversion. Masnick made the leap to the conclusion that mail order is far. From my own introspection, there are two effects here: the near/far difference, and the risk aversion effect, with the latter effect dominating. When I’m streaming videos, I’m much more willing to take a chance on a movie for which my priors indicate high variance, whereas when I’m mail ordering, I tend to go with only those DVDs I’m pretty sure that I’ll like.

  • Ely

    I’m interested in whether this extends to other purchase domains. Grocery shopping comes to mind. If you’re not hungry at the store, you might be more willing to take a chance on higher variance items (variance of your ultimate utility experience consuming them).

    If we want people to buy better food, then how can we induce far mode thinking right before they do their shopping?

    • Commit to a shopping list.

  • Ari

    This is interesting.

    My DVD shelf has very few movies or TV series I haven’t watched, probably around 5-10%.

    Same cannot be said for my book shelf, unfortunately! Best idea is just not to buy another book until you’ve read your previous one!