The Netfl ix Prize

Online contests, in addition to generating publicity, can also serve a practical purpose. One of the most talked-about competitions in recent years was the Netfl ix Prize. Netfl ix, a US firmthat rents DVDs to its millions of members, recommends fi lms based on members’ rental histories. The fi rm needed a way to improve this system, so it set up a contest – the Netfl ix Prize. The goal: to create an algorithm improving the current system by at least 10%. The prize: an impressive $1 million.

After the contest was announced in 2006, thousands of people made an effort to claim the prize. Participants included mathematicians, IT specialists, and other brilliant professionals. Though some neared the goal – coming as close as 8 or 9% – the 10% mark seemed out of reach. Over time, participants engaged in their own form of crowdsourcing and started joining forces. Finally, on June 26, 2009, one of these teams submitted an algorithm with an improvement mark of 10.05%.

According to contest rules, once the 10% mark was reached, other teams had 30 days to beat it. And one did, delivering an algorithm boasting a 10.10% improvement rate. After reviewing both teams’ submissions, Netfl ix announced the winner on September 21. All told, 40,000 teams from nearly 200 countries had participated in the race for the Netfl ix Prize. The company was very happy with the winning algorithm, not to mention the free advertising. In fact, on the same day the winner was announced, Netfl ix released details of a new contest – the Netfl ix Prize 2.