There are classic, important, society-changing movies from the previous century that were highly praised by contemporary critics and won scads of awards. But then people today watch them with zero context or understanding of what was happening or what the world was like and give them bad ratings because they can only compare them to the latest shoot-em-up sequel of a sequel of a sequel.
It's one of the reasons Rotten Tomatoes is worthless for anything more than 20 years old, and why the voices of movie critics are needed so badly today.
See also: Yelp.
The situation gets even worse from a diversity and internationalisation standpoint. You have to consider what different national and language groups want.
That's the opposite of "worthless".
The consequence is that you don't care about things like masses of teenage girls upvoting the latest vampire fad, people downvoting a classic because they don't understand the context or anything, because only your bubble matters to you. And if you fear that the bubble will keep you from discovering new things, there's a way to set up the algorithm to calculate your similar users so that they aren't exactly close to you - or you can go to a specific users profile if you know them and see what they're voting.
I find it amazing compared to IMDb or rottentomatoes, but for some reason I think it's mostly unknown outside of the Spanish speaking world.
Let's use a food analogy - I may go to a very fancy restaurant with exquisite food, and see that it holds up to its standards and is quite okay, and deserving all its stars. And in comparison I may have a basic hotdog or a sloppy burger, and admit that it's really nothing special, the fancy stuff was better, and that hotdog deserves less stars.... but at the same time that definitely does not mean that I always prefer the fancy stuff, and I can reasonably want that hotdog right now.
So that's the same with movie star ratings. I can at the same time agree that I liked movie A much better than movie B (and rank them accordingly), and I might re-watch movie A the fourth time and wouldn't bother with movie B ever... and at the same time not be in the mood for a complex movie like A, and want a simple, cheap, stupid movie similar to B, but with more explosions.
It's clear that 1 star sucks, but "5-star movies" and "4-star movies" perhaps simply indicate different genres of something roughly like "fancy" and "non-fancy" movies; and a fancy movie that's not really good doesn't get 4 stars but much worse; much like in the food analogy if the fancy restaurant serves something comparable in quality to that basic hotdog, it's not getting the same rating as the hot dog stand but much worse because of the unmet expectations.
Not only did the winning entry only bring in a slight improvement, and the payout followed suit, but they never actually used the winning algorithm.
Netflix's big winner for this contest, unplanned as it was, was their own recruiters and dev teams: Netflix became a company great developers wanted to work for because it cares about "hard problems".
They used to be alone in the space. Now they're competing with a lot of other services. Not in the DVD space, but I think they don't care about that space, and there are fewer people using it.
A lot of people suggest that there's another factor, that for streaming they pay different amounts for different content, and may not aim you at a movie that's expensive for them to show you. I have no idea if that's true.
Self-reported ratings fail in a lot of ways. Users can upvote what they think they're supposed to upvote. They'll downvote something, then go watch the sequel, because "It's terrible but I love it". And since they're seeking out stuff that they suspect they're going to like, they either compress all of the ratings into the top tier, or they end up "hating" things that they actually thought were merely so-so.
I suspect that even the up-down ratings get little attention in their recommendation engine. They have far more information, especially in the streaming service. Did you watch all of it? Did you watch it all at once? Did you watch it more than once? Did you watch it immediately after discovering it?
That's all stuff that users can't fake or be confused about. You don't get users saying, "Citizen Kane is the greatest film of all time, but I really don't want to see it." It's more likely that you can tease out what it is that a user actually wants to see, rather than what they tell you they want.
Netflix did run a competition back in the DVD days, when they had less interaction with the user. They did get a slight improvement, but at about the same time, they introduced streaming, and a whole lot of Big Data techniques appeared that could take advantage of that new data.
So it wouldn't surprise me if the up/down buttons were completely ignored by the recommendation engine. Maybe it's just a reminder to you: "Oh, yeah, I did see that. It sucked."
The new system clearly misses some things, but a lot of the problem is that the DVD catalog is immense and full of classics, but the streaming catalog is weak and full of crap. The whole thing may be back-ported into the DVD recommendation engine, but that's the redheaded stepchild at Netflix these days. They tried to spin it off entirely.