The popular mail in DVD rental company, Netflix, has canceled a sequel to a $1 million contest to improve its movie recommendations.

The DVD-by-mail service has settled a lawsuit about the sequel for an undisclosed sum and concluded a privacy inquiry from the Federal Trade Commission, Netflix said.

In light of all this, we have decided to not pursue the Netflix Prize sequel, Neil Hunt, chief product officer for Netflix, said in a blog post.

Netflix released millions of records on how its subscribers rated movies they watched in a 2006 contest aimed at improving its movie-recommendation system by at least 10 percent.

No names were provided, but critics said that this was enough information to identify subscribers.

Earlier in December, Netflix was hit with a lawsuit that said the improvements made to the recommendation engine made it easier to identify people through supposedly anonymous information.

The Federal Trade Commission began reviewing how private information belonging to Netflix's subscribers was protected, according to a blog post on the company's site.

In the past few months, the Federal Trade Commission (FTC) asked us how a Netflix Prize sequel might affect Netflix members' privacy, and a lawsuit was filed by KamberLaw LLC pertaining to the sequel, Hunt wrote.

With both the FTC and the plaintiffs' lawyers, we've had very productive discussions centered on our commitment to protecting our members' privacy.

The winning team received a $1 million prize last September when Netflix confirmed its intention to stage another contest.

Netflix Software Privacy