Netflix uses Crowd Sourcing to Increase Revenue

Written by on September 22nd, 2009

Over the past year I’ve been watching the drama unfold in the  Netflix one million dollar contest.

Netflix spent millions writing software code that would analyze their customer interests and likes and then use that information to recommend movies they would like.  If I give a thumbs up to the movie The Terminator, along with a number of sci-fi movies, the program will present me with additional movies that match what I am interested in..

The Netflix philosophy is simple.  The more movies I see that I like, the more I will order.

In October of 2006, Netflix caught onto the “wisdom of the crowds” thing and developed a contest that offered a million dollar prize for the individual or group that could improve the inhouse software they had developed.  (called Cinematch).

The winner would design a software program that would be 10 percent more effective and take away a million dollar prize.

The three year event has kept many in suspense, received a great deal of publicity and attention and has gone a long way to help their customers understand their passion to better serve them.  As a Netflix user, it caught my attention!  And to the participants who put hundreds of hours into the project, they just couldn’t let go.

The program started out with individuals around the world working on the problem on their own.  Then an interesting thing happened.  Individuals’ realized they didn’t have the expertise in areas that others who were actively working toward the solution had.  They realized they needed to merge or they were out of the race.  And as time continued, after one or two people came together, groups started coming together.   A group that realized they were slightly behind another team, then merged with a team that had code that would give them another 2 percent advantage.   And so it went until on Monday a seven person team of statisticians, machine -learning experts and computer engineers which called themselves the BellKor’s Pragmatic Chaos was announced the winner of the one million dollar prize.

It’s a great example where your company can reach out to customers and others and ask for their help in solving an issue or problem.  The Internet and social networks is making it easier for collaboration among companies, individuals and organizations.  The old adage of “Two heads are better than one” could never be more true.

Think about the advantages of this program:

  • Netflix did not have to invest in the solution until it was completed
  • They received ongoing press and increased awareness about their passion to better serve customers
  • And in the end they could potentially sell more product because their program is now 10 percent more effective

Netflix is so sold on the idea, they are taking it to the next level with another commitment of 1 million dollars .

Take a moment to think about how you can use crowd sourcing to solve tough issues your company is facing.

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  1. Twitter Trackbacks for Netflix uses Crowd Sourcing to Increase Revenue [] on says

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  2. Bring on the Crowd! « Queenbeedc1983's Blog says

    […] more on-demand movies and tv shows.  In exchange for this effort, Netflix is offering a whopping $1 million dollars to the team who can create an automated system that predicts how users will rate films 10 percent […]

    November 11th, 2009 | #

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