Exactly. A $1M investment by a company like Netflix to stay in our faces for - how long - '06 to 09 (and beyond!), was well worth it to them in terms of branding and new subscribers.
It also gave them a pretty solid idea where they stood, and how much (not) to invest in developing that area further. I'm not sure how much that is worth.
Can't emphasize this enough - with only a handful of employees working on the problem, Netflix could not have ever been completely confident that they were maximizing the predictive value of the data. The competition format quite clearly shows just how good the models can get. So even if they only implement the model with an ~8% gain, it's now an informed decision with known trade offs.
Well, there's still the question of which error function to use. They decided on sum of squares, which can and should be improved on - but it's not clear how. If they ever develop a different one, the performant models may well differ substantially from what they got.
