Interesting take on the future of Netflix

Published by marco on

The article Netflix’s dumbed-down algorithms by Felix Salmon (Reuters) discusses a change in focus in recent years at Netflix—actually since they switched to emphasizing streaming content over DVD delivery.

Netflix has started to position itself more as a television company than a “great movies” company because of purely economic reasons. As Salmon puts it, “Netflix’s big problem, it seems to me, is that it can’t afford the content that its subscribers most want to watch.” The big blockbusters that people actual want to stream aren’t going to be affordable at only $8 a month per subscriber—not when on-demand services from cable companies are asking that same price per movie.

He goes on in more detail,

“Once upon a time, when a movie came out and garnered good reviews, you could add it to your list, long before it was available on DVD, in the knowledge that it would always become available eventually. If you’re a streaming subscriber, however, that’s not possible: if you give Netflix a list of all the movies you want to watch, the proportion available for streaming is going to be so embarrassingly low that the company decided not to even give you that option any more.”

In the good old days, Netflix would use quite a sophisticated algorithm to score its enormous backlog of DVDs to find and suggest movies that you really would end up liking. But that enormous back-catalog is not available as streaming content. Why? Trademark and licensing issues, of course. Economically and ecologically, it would make more sense to stream movies instead of producing DVDs and shipping them around the country, but now is not the time to start arguing IP law. Instead, Salmon explains what Netflix does instead:

“So Netflix has been forced to attempt a distant second-best: scouring its own limited library for the films it thinks you’ll like, rather than simply looking for the specific movies which it knows (because you told it) that you definitely want to watch. This, from a consumer perspective, is not an improvement.”

OK, now it should be clear that while Netflix has a pedigreed history in quality movie delivery, movies can’t be Netflix’s future. But why the emphasis on television rather than movies? How does that improve matters? Salmon again,

“One huge difference between TV and movies is that audiences have much lower quality thresholds for the former than they do for the latter. […] TV shows are cheaper to license than movies are, and people tend to be much more addicted to their TVs than they are to watching movies […] Netflix […] just wants to feed me more and more and more of the same, drawing mainly from a library of second-tier movies and TV shows […]”

The goal is to secure eyeballs and ad revenue, the same as standard television today but with an IP-based content-delivery model. So Netflix retains its name, but not its original purpose. Other services will replace it, I’m sure.