Netflix Case Study

1. Introduction

      I think holding a contest to improve Cinematch is reasonable. However, while Netflix exploit “wisdom of crowd” effectively, I found that there were several challenges. I would like to discuss 1) Why Cinematch is appropriate for a contest, 2) recommendation to contest design, and 3) remaining challenge.

1. Why is Cinematch  an appropriate setting for holding a contest,

      I believe Trying to holding a contest to improve Cinematch is appropriate with following three reasons; 1) Clear direction, 2) expectation for diverse expertise, 3) benefit of holding competition.

     First, Netflix showed defined subject, well organized structure, and clear KPI. I have learned from “the Bakeoff” case that open innovation doesn’t work well if an organization lacks leading function to consolidate various expertizes. However, Hastings showed his clear direction. The problem, 10% improvement accuracy of Cinematch, is very specific and concrete. On the other hand, solution will accept various ways. I think Cinematch has a good balance between clarity and ambiguity.

     Second, Netflix had already spent much time and resource on developing Cinematch. It seems that they tried all of things as far as they can. In addition, hiring people and outsourcing could be a solution, but these two ways have limitation to get various and diverse developers. Holding a contest may be a last resort. Without spending time and money, Netflix can get opportunity to reach out experts and solutions which they had not expected. Netflix may expect to find solution in their blind spots.

     Finally, Collaboration Filtering System has been quite popular concept. Tremendous number of e-commerce site and travel reservation site, such as Amazon and Expedia, have adopted CFS. It means that there were many developers who are familiar with CFS and has different background from DVD recommendation. The challenge is more of improvement of an existing solution, like Linux, rather than creating invention. Since there are enough expert developer, holding a contest may gather developers from different regions, various companies, and diverse expertise. Furthermore, solution for 10% improvement is like a final piece of complicated puzzle. This challenging subject may stimulate interest of expert people, so a lot of developers wanted to join the contest. Netflix can contact these experts without hiring such talented people. From the above reasons, holding a contest makes sense to Netflix.