How To Become A Millionaire, Netflix Style
Written by Noemi Pollack on September 24, 2009.
Consider how many ways are available to become a millionaire, quickly or not.
You can play the lottery year in and year out and maybe become that one in 10 million that wins something, if not the full million; you can get on a whacky game show program and hope that you get as lucky as the guy in Slum Dog Millionaire, when he got asked the exact questions for which he knew the answers; or enter the Publishers Clearing House contest or, if qualified, participate in an unusual contest where innovation and brains become the entry ticket to becoming a millionaire.
Netflix did just that… It set up a contest back in 2006 to improve the video rental and streaming service’s recommendations engine by 10% or more and offered $1,000,000 to whoever managed to get there first. And this week, out of the 40,000 teams, from 186 countries, who competed, Netflix announced a winning team.
Why a contest? They could have gone the conventional route, as in — hire a team of experts, give them a deservedly high salary and let them do their own thing over the next three years to meet company directives.
Instead, Netflix tapped a global village of PhDs — a collaborative effort by teams of statisticians and computer engineers, all of whom devoted their time and brains, certainly not for the purpose of winning the $1,000,000 prize, but to win much more – a chance to grapple with a huge data set and the challenges of large-scale modeling. Basically, any team, winner or loser would benefit, and so would Netflix of course, as well as countless of other entities where the winning data technology could be applied — across the fields of science, commerce and politics.
Netflix won far more than a new winning technology, which will be used to further improve Netflix’s recommendation system. For its $1,000,000 investment, it received the attention of the worldwide media, hailing its model as a potential for an “emerging prize economy” now closely watched by international corporations. No advertising or any other promotional efforts could have achieved this for that dollar investment.
Basically it was a marketing feat.
Promotionally, Netflix did something else very clever. It intentionally prolonged worldwide media attention by ruling that the winning team was too close to call and thereby forced a 30-day challenge run, which caused teams to scramble and merge in an effort to beat out the winner, intensifying the media frenzy.
Although Netflix got the attention, there are other groups offering cash payments or prizes for product development or applied sciences, such as InnoCentive and X Prize Foundation. They have Netflix to thank for bringing attention to the prize model.
Still, amidst all this positive news, it was Netflix’s chief executive, Reed Hastings who put his foot in his mouth when he said, (as quoted in Steve Lohr’s article), ”You look at the cumulative hours and you’re getting PHDs for a dollar an hour.”
Might have been prudent to re-think that message…




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