Netflix . the online leader in movie rentals had a typical problem at its hand. It wanted a recommendation engine to recommend movies to its users. The problem statement was “To improve the accuracy of predictions about how much someone is going to enjoy a movie based on their movie preferences.”

They had tried to find a solution to this in house and had spend some time and resources but without much luck. So they they threw this challenge for people  to come together and solve this problem. The grand prize of US$1,000,000 was reserved for the entry which would best Netflix’s own algorithm for predicting ratings by 10%

You can read the details about the problem from wikipidea

This challenge although is not the first one in which companies had thrown open the problem to a group of people or team but the amount at stake was very high this time. This is an example how crowdsourcing is being used to create innovative solutions. In the coming years we will definitely see the growth in this kind of approach where in companies can use social platforms like facebook and google wave to find solutions to complex problems.

On September 21, 2009 Netflix awarded the $1M Grand Prize to team “BellKor’s Pragmatic Chaos” .

Netflix challenge winner