Amid class-action lawsuits over privacy and subsequent FTC inquiries, Netflix announced today that it will not be pursuing the next Netflix Prize.

For more than three years, individuals competed to win the $1 million Netflix Prize, in the process improving the company’s algorithm for recommending movies to its users.

When the results were first announced last summer, Netflix followed them up with an announcement that a second contest would take place.

Unfortunately, the next iteration is not to be. A class action privacy lawsuit arose when a customer claimed that the rental information that Netflix makes available for use in the contest wasn’t anonymous enough and could theoretically be linked to her and reveal her sexuality.

As Ars Technica notes, researchers have often said that the external data source could be linked to an individuals renting history, something that does present certain privacy risks.

Netflix has settled the class action suit and the FTC inquiry, but the Netflix Prize is no more. While we understand the potential privacy concerns and why this could be an issue, we’re sad to see the Netflix Prize go.

Netflix said that it intends to continue to look at how it can collaborate with the community when developing its recommendation engine. Here’s an idea: Ask people if they are willing to opt into public research. Frankly, I’d be more than willing to do that in exchange for better and more accurate movie recommendations.

What do you think about the end of the Netflix Prize? Let us know!

Tags: netflix, netflix prize, privacy, recommendation engine