Netflix’s crowdsourced victory

Netflix's crowdsourced victory (Netflix)Three years and one million dollers later, Netflix has an improved ratings and recommendation system, and months of free advertising in the lead up to a jubuilent conclusion for the BellKore Pragmatic Chaos team. Thousands of teams from across the world submitted their ideas, ultimately leading to a final round of mergings which brought team BellKore across the finish line 20 minutes before their primary competitor, Ensemble.

The experiment is a three-fold triumph: For Netflix (the company’s stock has been steadily climbing over this year and was up .30 on Monday when the results were announced); For the wider technology community who will get to benefit from the winning team’s algorithms–publishing methods was one of the stated requirements of the competition; and for the infinite possibilities of crowdsourcing–both as a problem solving and a marketing tool.

We’ve been talking at the Lab about the benefits of crowdsourcing for much of this year. As Jeff Howe writes in his book, “Crowdsourcing,” it’s the age of the amateur: “Increasingly skilled and capable of organized, sophisticated collaboration, amateurs are competing successfully with professionals in fields ranging from computer programming to journalism to the sciences. The energy and devotion of the amateur comprises fuel for the crowdsourcing engine.”  Dell, P&G, and Starbucks are all examples of companies who are turning to the wider crowd to innovate and problem solve. However, the Netflix case shows that putting up a little financial commitment behind a larger effort may be worthwhile to get the real change agents working on more complex problems (i.e. how many PhDs does it take to recommend a movie?…)

Netflix is contending with how to stay relevant through Hulu’s success and the two million plus connected TVs that are ready to come to market by the end of the year. However, Netflix has already shown that it knows how to bob and weave in challenging times–expanding its reach via instant streaming and getting itself integrated into nearly every advanced TV solution on the market this year. The Netflix prize is just one more example of the company’s commitment to evolve and innovate (just check out their recently published fascinating freedom and responsbility culture guide).

Neil Hunt, Chief Product Officer at Netflix has already announced the followup to the first Netflix Prize:

“…like so many great movies, there will be a sequel. The advances spurred by the Netflix Prize have so impressed us that we’re planning Netflix Prize 2, a new big money contest with some new twists. Here’s one: three years was a long time to compete in Prize 1, so the next contest will be a shorter time limited race, with grand prizes for the best results at 6 and 18 months.While the first contest has been remarkable, we think Netflix Prize 2 will be more challenging, more fun, and even more useful to the field.”