Netflix Announces $100,000 in Prizes for Coders

Description: Last night Netflix hosted a gathering at its spa-like headquarters for 200 or so members of the Clouderati—the engineers building out the computing infrastructure on which businesses will someday run. Netflix (NFLX) has a reputation for pushing the limits of cloud computing, running much of its movie streaming business on’s cloud rental system.


Date: March 14, 2013


When it comes to infrastructure technology, we live in absurd times. Netflix—like Facebook (FB), LinkedIn (LNKD), Twitter, Yahoo (YHOO), and other Web celebs—open sources much of the software that underlies its operations. Put more bluntly, they fight for the right to heap money on the smartest engineers, then give away their work so that others can build on top of it. Together, all these companies are forging the cutting-edge cloud computing technology that mainstream companies will use in the years to come.

At its event, Netflix looked to turbocharge the process. The company announced $100,000 in prizes—$10,000 for 10 different awards—for volunteer coders who can develop interesting tools based on Netflix’s open-source code over the next six months. (Rules here.) The revelation of these prizes was met with great applause. Now the race is on for people who don’t work at Netflix to improve the company’s infrastructure. READ REST OF STORY

Questions for discussion:

1. What is the model that Netflix is using to develop a technology infrastructure?  How is it different from say companies like Microsoft and IBM?

2. DO you feel that Netflix’s model is the way IT development will happen in the future or do you see this as just a fad?

3.  What are the strengths and weaknesses of this model?


14 thoughts on “Netflix Announces $100,000 in Prizes for Coders

  1. Antonia

    Netflix is using open sourcing, which is a great new way to develop their technological infrastructure. This innovative way of developing allows for more people to have an opportunity to come forward and show there talent, when they may have been overlooked in the past. I can see other companies adopting this new way of developing, i believe it will be very effective. IBM and Microsoft do their work in house; although this is the traditional way of doing business they should consider this new way as it can create more opportunities for the company, outsourcing may bring new ideas into the company. This would be a smart move for companies to adopt to keep up with change, it may help reduce costs, and may help in recruiting future employees. By allowing the open sourcing it allows people who actually use the technology to come up with ideas, it may be more of an advantage over insourcing because developers open sourcing may be aware of the flaws of the software from first hand experience. Problems with this is it may allow for competitors to have the design behind the infrastructure available, security is definitely a problem, it makes me wonder if anyone will abuse the system for malicious purposes.

  2. Sean

    Netflix has started using a cloud model of computing and working, it is unique compared to other companies like IBM and Yahoo who have a traditional method of selling. This is because they want their employees to bring their personal ideas into the picture so that society can relate to the company on a more personal level. This is a strong model because it provides a way for all people to be innovative and expressive through promoting Netflix main goal, they offer a ten prizes of 10000 dollars to the individuals who best support Netflix and its goals. Not only does this promote Netflix in a positive light, but it allows the company to personally recruit and choose their employees who they know are going to be strong assets to the company in the long run. Netflix is one of the main innovators in the industry because they involve the public to learn what they can do to become a stronger company, while benefitting through staffing their team with influential employees.
    Some of the positives that netflix has been able to touch on are that they have been able to continuously and successfully connect through constantly staying connected through various means of social media. They do this through sources such as Twitter and Facebook where they have full availability to what society wants and needs to be happy. Microsoft did not take the opportunity to enter into the social media field, and with this they did not reach the same level of success or respect from society that Netflix has been able to obtain.
    Some drawbacks to cloud computing are the fact that Netflix isn’t the owner of the property since it was developed through the public eye. This is the bonus that IBM and Microsoft get from developing their own software.

  3. chow sau pui

    Netflix use the cloud computing , an innovative way to set the technology infrastructure and it can increase profit. The clouding would make Netflix for favorable for public because cloud computing let the user to share what they want. Microsoft and IBM is hard to use this function build their product because These kind of companies are not doing specifically in one area. Therefore, i am sure if they can get the similar benefit to Netflix would.

    I believe this IT development is new trend in the market because it is easier to satisfy customers’ need. Since it could satisfies customers’ need, it would be more favorable in companies’ profit.

    This model makes customers have more invlovment to the company ;however, some of customers might not know how to use this technology to reflect their needs.

  4. Colin Stevenson

    Netflix is using a very innovative open source strategy to advance the functionality of technology. IBM and Microsoft have been the giants in technology and have operated solely on a proprietary model. The fundamental difference is that with open source code anyone and everyone can improve upon what already exists. This creates many opportunities that are not evident with a closed source that IBM and Microsoft exist on. Cloud computing is definitely the future of computing. It is quite obvious that technology giants that would seek to control everything have failed to capitalize on this trend. It is more than just a fad, it is an entirely new business model. Cloud computing makes everything simpler, and it removes the need for all kinds of IT related expenses for smaller companies. The strengths of this model allow problems to be found, addressed and resolved much more efficiently. By announcing these awards Netflix has essentially inspired a free workforce to improve upon what has already been accomplished. The weakness of this model is that only a few will truly benefit from the work of many. There is no telling what the future of computing will be but in the short term cloud computing will definitely revolutionize the industry. IBM and Microsoft may find themselves scrambling to capitalize on this trend. The companies involved such as Google and Facebook are the technology giants of today, whereas IBM and Microsoft were the giants of yesterday.

  5. Brogan Mueller

    Netflix is using cloud computing, and open/out-sourcing as their model, where as Microsoft and IBM are using traditional in-house business practices. This gives Netflix a huge advantage because they are able to access many new and innovative options for new software, where as IBM and Microsoft are more limited. I think Netflix’s infrastructure will be the norm in the future. As technology becomes more and more advances, there are more opportunities for new ways of business, and Netflix is already on board. Netflix allows consumers to have more choice and access their products faster. Netflix’s model has strengths such as more selection, better quality for less money, new innovation and ideas from all over the world. These strengths make this model a huge competitor in the IT world. Netflix has some issues with the model however, such as security issues, and if they are in-fact allowed to out-source their codes through this means. Netflix’s model also exposes their code to the public, which could be taken by competitors, for practically free. I believe Netflix has a huge advantage using open-sourcing and many businesses will follow in the future.

  6. Jake

    Netflix is using the model of cloud computing rather than Microsoft and IBM’s traditional method of selling software. This is different because it allows the user cheap access to current software. With the traditional methods that the software giants of the past used, the user was forced to make regular software package purchases and install them on their computer. Netflix is creating an infrastructure where amenities are available to all consumers for reasonably cheap prices. I see Netflix infrastructure as the way of the future because it continuously pushes the envelope for new technology and performance. With the model that Netflix has introduced new avenues will be discovered that we to this date have not even thought of. For this reason, Netflix will not be just a fad. They will continue to grow and develop and their loyal consumer base will follow them because of their easy to use technology model. The strengths of this model lie in its availability to consumers. Since this technology is so easy for customers to use and enjoy, they keep coming back which creates a loyal following. One weakness is that since the platform is not on the users system, if the host server experiences a problem, every user will feel the effects.

  7. Navreet

    Using outsourcing to develop infrastructure is a brilliant idea and by employing this, Netflix definitely has an advantage over companies like IBM and Microsoft. Progress in IT is not confined to a number of selective people; it is open to whoever thinks outside the box. By allowing an open platform to design and contribute, Netflix has decided to choose the best of the best ideas. This is better than in-sourcing which companies like IBM and Microsoft are doing because it allows a lot of different ideas to move forward with. It is great that a company like Netflix understands that progress in IT has no boundaries.
    This is definitely a futuristic thinking and is not a fad. Maybe in the future IT companies might not even have employees but just contributors who add to their next big idea. Moving towards progress in the future is about supporting the best ideas and not pulling them back.
    • Allows a lot of voices to be heard
    • Uses the selection method to choose between ideas
    • Gives everybody a fair chance
    • Raises Security issues
    • Might not be able to maintain fair competition for all

  8. Katie Guccione

    The Netflix model is unique compared to other because the want their employees to bring their personal innovative ideas that society can relate to. This is a strong model because it provides a way for all people to be innovative and expressive through promoting Netflix main goal, they offer a grand prize to those individuals who can best support Netflix and its goals. Not only does this promote Netflix in a positive light, but it also allows for the company to personally recruit and choose their employees who they know are going to be beneficial. Netflix is one of the main innovators because the involve the public to learn what they can do to become a stronger company, while benefitting through staffing their team with strong candidates.
    It is society that enables companies to understand the way society moves throughout its cycles, and due to this Netflix has been able to continuously and successfully connect through constantly staying connected. They do this through sources such as Twitter and Facebook where they have full availability to what society wants and needs to be happy. The company Microsoft did not take the opportunity to enter into the social media field, and with this they did not reach the same level of success or respect from society that Netflix has been able to obtain.

  9. Yionna Wesley

    The technology infrastructure that Netflix uses is “out-sourcing.” This can prove to be a more cost effective for the company. The reward pay out to a successful code builder is very minimal, compared to a team of computer engineers on salary. This is quite smart; you have all the rewards and no fringe or benefit packages that have to pay out. As we know, salaries will cover eighty percent of an operating budget. Microsoft and IBM are all about “in-sourcing,” thereby having to pay the salaries of those code builders from within house. Some other costs outside of the salary are: office space, ergonomic desks, ergonomic chairs, hardware, specialized software, bonuses, and sick days, just to name a few. This might not be such a great idea if that team isn’t producing the innovation needed to stay ahead of the competition. Netflix has accomplished gathering fresh ideas and maybe even gathering a pool of new potential employees. This seems to be a common approach for those companies that do not have the financial resources to hire those expensive computer geeks to do that specific kind of job and they don’t have to pay other costs incurred when hiring full-time employees.

  10. Crystal Smallface

    Netflix uses an outsourcing model to develop their infrastructure while IBM and Microsoft use in house sourcing to develop their technology systems. Of course outsourcing will always provide more ideas and a different perspective on the business which in most cases can be beneficial to the organization. I think that Netflix is successful with this type of model because of the nature of their business. They provide entertainment to the public and have no real security issues except for customer data such as credit card numbers and personal information. The main component of their business is sharing their products to consumers for a price and this type of technology model complements that and it works for them. So yes I would agree that for these types of businesses the future for them is to follow in Netflix’s footsteps. The future is in technology and to remain a brick and mortar institution is in the past and is a recipe for failure. The Blockbuster store is just an example of not getting on board soon enough to capture part of Netflix’s success and gain that portion of the market. Although this type of strategy would only work best for these types of businesses the main advantage is being able to attain and attract a larger audience and customer base; the main disadvantage of course is security.

  11. Dallon Martin

    First of the idea of open sourcing is awesome, they are going to be able to get much further much faster with this approach. Being able to build off each other and use each others ideas will help develop these new ideas. IBM and Microsoft are using in house and its just not as effective, although it does have it benefits that outsiders dont know your ideas. I feel that this way of out sourcing will be the future and we will be able to see new technologies invented as well as previous technology advanced upon. As companies start involving themselves in open sourcing other companies are going to fall behind that do not involve themselves in it. I think that companies with then just find something else to differentiate themselves. The strengths of this model are there are so many different ideas and methods being pooled together to come out with the best one. I feel that it will make technology so much easier with all the input being considered in the open sourcing. Weaknesses are security potentially but i feel that they will be able to solve that. I like the overall idea of this.

  12. Brendan Schlossberge

    It is called open sourcing and it is different from IBM and others because they develop their software in house which takes longer and isn’t as effective as Netflix’s open sourcing. This will likely become the future until a better innovation comes along. This method is currently the most efficient one. Therefore competing companies will begin to adopt it so that they can actively compete with Netflix. Without the best techniques and technologies these companies will fall behind and eventually fade away. Eventually some new technique will become more effective but open sourcing will not be a fad because it is so successfully used by Netflix. This model provides many many different ideas since it uses so many people to come up with the best solutions and results. This method also allows people to collaborate with others who aren’t even acquainted with each other therefore getting the best thinkers together. Some drawbacks are that it isn’t Netflix’s property since it was developed through the public and hence Netflix cannot use this technology as a competitive advantage. This is the bonus that IBM and Microsoft get from developing their own software. Another drawback is that when Netflix open sources its IT competitors can freely use any developments to their advantage.

  13. ibrahim.akinola

    I feel that Netflix’s model is great and provides a way for innovative and intelligent people to show what they are capable of, by placing a grand prize for people who bring about good idea relating to the company’s goals; the firm is able to pick out intelligent and future employees for the company; also the amount of ideas that will be brought to the company can give the firm a huge leap in the market at a suitable cost, instead of spending huge amounts of money to acquire a company that has that technology. Netflix model is different from others companies because they allow different individuals through their event to bring ideas that the society can relate to. Examples are simple things such as Facebook, Twitter, Instagram that made a big impact in our society today.
    Companies such as Microsoft and IBM will not have thought about the Facebook or twitter ideas and if they had; they would not have done an excellent jobs as what those respectively owners did. Hence we can as well say it is the public that understands the way the society work “to some extent”, this is because they have the time to examine and analyze their surroundings to better understand the society more than a full-time Netflix employee sitting at his desk all day and having limited time to a analyze the full society in general.

  14. Marc

    1. Open / crowd sourcing, versus in-house / proprietary. It’s different because you have access to a much larger talent pool.

    2. I see it continuing in the same direction it’s going, where some companies will continue to develop sensitive, mission-critical systems in house (like BlackBerry’s BES), and companies using open source software can encourage the participation in the open source development with cash prizes and career opportunities.

    3. Strengths: For small, compartmentalized tasks that are easily defined (make something cool or useful), it’s easy to open it up for people to take it on as a hobby or project of interest outside of their day jobs. As mentioned in the article, it adds a new stream to their recruiting efforts full of high-quality candidates.

    Weaknesses: exposes infrastructure code to the public, creating potential security issues. I’d be curious to know if Netflix’s payment system is included in the open source code.


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