NetFlix Offers $1MM for Better Movie Predictions

Posted: under Niche Marketing Expert Gallery.
Tags: , , ,

If you have used NetFlix, the DVD rental service, you’ve probably used their recommendation service. They’re success rate in pleasing customers is about to get much better.

Scene from "Makin A Living", Charlie Chaplin's first movie (1914)

Scene from "Makin A Living", Charlie Chaplin's first movie (1914)

The niche market of movie buffs is an eclectic lot. While the rental stores are forced to categorize their physical inventories by such choices as drama, comedy, or action, your individual preferences might be much more varied. Maybe you like Kate Winslet movies. Or you like movies shot in exotic locations. Whatever. NetFlix is spending one million dollars to make you happy. Or, at least, 10% happier. Why? Improved loyalty, more subscribers, more cash.

To accomplish that goal, NetFlix has been running a contest, asking for outsiders to help them improve on the accuracy of predications by 10 percent when compared to their proprietary Cinematch software (originally launched in 2000). After 42,000 contest entries, a team called BellKor’s Pragmatic Chaos has apparently met the goal and is prepared to claim the $1MM prize.

When you engage in marketing to a niche audience, you always have to be wondering how good is good enough. In a retail store, broad categories might be enough to satisfy customer expectations. NetFlix realizes their customers expect more, and are willing to spend 7 figures to raise the bar and hopefully gain a competitive advantage. They understand they serve practically infinite variations of customers, and doing that better than anyone else is how they defend their niche and make their money.

Comments (0) Jul 10 2009