No Thank Queue, Netflix

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It's not often that you see Netflix (Nasdaq: NFLX) going the wrong way, so you may as well marvel at the dust cloud as the dot-com movie star shifts into reverse.

The company is abandoning its Profiles feature, a sticky offering that allows subscribers to split up an account into several queues for individual family members. Come September, all of the DVDs in the secondary queues will merge into the primary accountholder's list. It's Obit City for your spouse's movie ratings and your daughter's stand-alone list of discs she wanted to see.

Anyone who knows Netflix can realize how stupid this move is. Netflix is a company that prides itself on its data crunching. It delivers recommendations based on the films you like, by comparing your movie ratings to others with similar tastes. I have always felt that if the optical disc goes bust, Netflix could make a cozy living as an online matchmaker. Now, though, it's more like a homewrecker.

Why would Netflix risk the integrity of its recommendations? After all, once it sees your kid's Pixar flicks, your mate's tearjerkers, and your penchant for buddy-cop celluloid all mixed together into one mangled stew, won't Netflix know even less about you?

TiVo's (Nasdaq: TIVO) marketing slogan last year - "My TiVo Gets Me" -- was solid. Channel-surf long enough to pick and pan broadcasts, and the digital video recorder gets to know you better. The more you shop on Amazon.com (Nasdaq: AMZN), the easier it is for the leading online store to send you deals that matter to you.

Why would Netflix destroy its ability to get to know more of its subscribers' families as individuals? It's not as if families will bite the hook and open multiple accounts.

"While it may be disappointing to see this feature go away, this change will help us to continue to improve the Netflix website for all our customers," explains the company's website.

Really? Don't tell me that all of the Profiles data was hogging up the servers. Let's not pretend that a simple app was leaving an entire IT department rocking on the floor in the fetal position, unable to develop new site enhancements.

I've been a satisfied Netflix subscriber -- and shareholder -- since 2002, and I'll admit it: I've never used Profiles. That's not the point. Even if I didn't take the time to invest in creating the family profiles, like many unhappy people venting in cyberspace yesterday did, I am still affected by the credibility issues. Will I really want to use the Friends feature, if it too may go away? Why should I invest $99 in the Roku player for TV streaming? Can I trust you, Netflix?

I think I can. I am not anchored to yesterday's truths. Membership prices will fluctuate. Technology will force changes, like when Netflix and Blockbuster (NYSE: BBI) gave HD-DVD the heave-ho. That is all acceptable. I just fail to see the logic in hacking away at features and calling it an improvement.

I'll consider it an improvement when I can stream most Netflix films through my TiVo, Microsoft (Nasdaq: MSFT) Xbox 360, or Apple (Nasdaq: AAPL) MacBook. Not this.

I loves ya, Netflix, but I'm rating this move one star.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 20, 2008, at 11:58 AM, tgauchat wrote:

    Doh! The reason they are cutting profiles is that they want families and friends to subscribe to multiple accounts instead.

    Profiles are a potential revenue leech.

  • Report this Comment On June 20, 2008, at 12:38 PM, mtmtsullivan wrote:

    They may want multiple accounts but after this move my wife has decided she's going with Blockbuster and I'm sticking with Netflix but moving to a plan with fewer discs. Not the outcome Netflix was hoping for, eh?

  • Report this Comment On June 20, 2008, at 3:06 PM, mikemorel wrote:

    Netflix is preparing for the download future. Their DRM needs individual account names and passwords in order to have your queue follow you around wherever you go.

    If you have three "family" members then downloads would be problematic. People could have their friends be "family".

  • Report this Comment On June 22, 2008, at 2:43 AM, charlespaugh wrote:

    I knew Netflix was in trouble when last year it eliminated the ability for customers to contact support via email which has been especially troublesome for hearing impaired customers -- as well as a minimum 30-45 minute hold time trying to telephone customer support. Now that "profiles" have disappeared, I no longer see a difference between the service offered by Netflix and Blockbuster. It is why our family went with Netflix over Blockbuster. Lastly, we had a little problem with our high speed internet the other day and a technician was out to our house, saw a Netflix sleeve on the counter, and commented, "You know we will be throttling internet accounts using that new Netflix box to download and watch movies since it competes with our pay per view feature." Yet, Netflix isn't speaking up to defend customers against the likes of Comcast in these internet throttling wars. So, what's the deal?

  • Report this Comment On June 24, 2008, at 12:12 AM, EddieOffermann wrote:

    Reed Hastings, Netflix's CEO issued the official Netflix stand on net neutrality a couple years ago. (Net neutrality, for those who may not be aware, is the sort of thing that would prevent a company like Comcast from throttling Netflix's internet bandwidth) Hastings was against government interference, stating that since customers are paying for the bandwidth in order to use a particular service that the economics would work itself out. A provider denies equitable access to a service and the customers leave that provider. Or at least that's how it works in Hasting's ideal world.

    I think it's clear that was a foolhardy position for Hastings to take: it's one thing if General Motors is going around burning down gas stations they don't like: where will you buy gas to put in their cars? It's quite another if they're opening their own stations and just burning down the competitors. Obviously they benefit in the latter situation because the market is for the cars (or the movies), not for the gasoline (or download source).

    Nobody *really* cares if they get their movies from Netflix - the movies from ITMS or Blockbuster or Amazon or whoever are just as good: The Netflix brand conveys nothing to the movies themselves. It's the service that they provide, the method they deliver it to you, the ease with which they do so and the ways in which they can enrich the user experience that make or break them as a company.

    Reduce the Netflix service to "just another place to get movies" and then it's all about things like download rates, ease of use and value-added services like intelligent automatic recommendations.

    Eliminating services is a bad sign and no matter their motivation, it won't help them stand in the new marketplace.

  • Report this Comment On June 24, 2008, at 12:23 AM, EddieOffermann wrote:

    Oh, and I should also add that Hastings was pretty inconsistent about any particular position... There were other times on record where he supported a "tailored approach" to Net Neutrality.

    A perfect example of when one's personal convictions about how the marketplace ought to operate and one's support of their company and defense of their stockholders are in conflict. As CEO, he was duty bound to support Net Neutrality: without it, Netflix would never be able to compete with Cable and Telco providers in online delivery.

  • Report this Comment On June 26, 2008, at 1:32 PM, mudshark23 wrote:

    I agree witht Gauchat, this article is short sighted. If you trust that Netflix will be a leader in the future of digital entertainment delivery, you should have confidence that the decisions made will be a means to that end. Mr. Munarriz seems to know more about Netflix's game plan and strategies than Reed Hastings does.

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