Monday, September 21, 2009

Best-spent $1million in history? (NFLX)

AlphaNinja - Netflix (NFLX) has quite a fight ahead of it. They face competition from Blockbuster, Redbox, hulu, Amazon, and the list goes on. That's not the point of this note.

Netflix Awards $1 Million Netflix Prize and Announces Second $1 Million Challenge

NEW YORK, Sept. 21 /PRNewswire/ -- After almost three years and submissions by more than 40,000 teams from 186 countries, Netflix, Inc., the world's largest online movie rental service (NASDAQ: NFLX), today awarded the $1 million Netflix Prize to a team of engineers, statisticians and researchers who achieved the competition's goal of a 10 percent improvement over the accuracy of the Netflix movie recommendation system when the competition was launched in Oct. 2006. Netflix members already are benefiting from improvements Netflix Prize contestants have contributed to the recommendations system.

Moments after bestowing the $1 million prize, Netflix announced a second $1 million challenge, asking the world's computer science and machine learning communities to keep the improvements coming.

The team "BellKor's Pragmatic Chaos," the merging of three teams that had previously competed against one another in the contest, received the $1 million Netflix Prize in an award ceremony hosted here today by Netflix Co-Founder and CEO Reed Hastings and Chief Product Officer Neil Hunt.

(Almost) Nothing gets me more excited than companies spending shareholder dollars prudently. This might be the best-spent $1million in corporate history. For $1million, Netflix had thousands of people competing to come up with a profit-enhancing update to one of its algorithms, compared to hiring maybe 5-6 in-house researchers, considering salary and benefits. This is a STEAL, and maybe the wave of the future for certain R&D spending???

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