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Welcome to Oscar weekend, Netflix (Nasdaq: NFLX ) . In honor of Hollywood's most fancy night of the year I've a few ideas for sprucing up your digital persona. Call it a long-overdue social makeover.
My aim with the three suggestions that follow isn't so much to criticize as to point out that, as consumers, we're exposed to more noise than ever. We rely on experts, friends, and extended networks to filter the good from the awful. At Netflix, this isn't easy to do.
You used to be good at this. Remember when we had Netflix friends? That feature allowed us to check in on what our buddies liked and loathed. We could also see what they planned to watch.
All that ended a little more than two years ago, when data showed that less than 2% of customers used the "friends" feature. So executives pulled the plug and redeployed the engineering resources elsewhere. High returns on equity and capital have since validated that move, unpopular though it might have been at the time.
Yet the landscape is also more competitive today. Sure, DISH Network (Nasdaq: DISH ) is shuttering a third of its 1,500 Blockbuster stores, but Comcast (Nasdaq: CMCSA ) has announced plans for its own streaming service. Amazon.com (Nasdaq: AMZN ) is also growing its library of digital content as the Kindle Fire establishes itself as a legitimate iPad alternative.
Most recently, the e-tailer put out the call for a "Creative Director of Comedy" to develop original programming for the Web and other distribution channels. And that's one of a handful of what appear to be serious programming jobs. Plans apparently call for Amazon to be just as aggressive as its peers in finding and funding new content.
So far, Netflix, your response has been to stay the course, forsaking personalized filtering in favor of an automated and mostly toothless recommendations engine and generic member ratings. I think you can do better. Here are three ideas for how:
- Start with the buttons. Every Netflix page for every show should have social-media buttons embedded. That way, if you're thinking about a show you haven't watched or a film not yet out on DVD or Blu-ray, you can ask your network for thoughts. Who cares what some random Netflix member thinks? I want to know what those who know me think. That's the genius of entertainment-themed social network GetGlue; I'm connected with those who know my tastes.
- Build collections. Why can I have a queue but not a list? Amazon lets members go so crazy with lists through the feature it calls "Listmania." On Netflix, I should be able to develop lists of shows and movies I like for staying in bed sick, working out on the treadmill, having family movie nights, and so on. Anything that allows members to personalize the experience strengthens the competitive moat and in so doing enhances the prospects for long-term investment returns.
- Rethink affiliate marketing. Forget payoffs for banner ads. How about sponsoring a blog network of fan pages written by real Netflix members? Every blog would have a Netflix address and link back to the program being covered. Readers would get the option to watch previews, juicing the subscriber rolls as non-members are encouraged to sign up. The program could also placate Hollywood as undiscovered shows find a home and a following.
Netflix hasn't done much for investors recently. As bullish as I am on the business -- I have a real-money position, and I've made a long CAPS call on the stock -- I'd be remiss if I didn't also admit that there are other ways to make money on the rise of streaming video. Tablets, for example. A new Motley Fool report titled "3 Hidden Winners of the iPhone, iPad, and Android Revolution" spotlights a handful of stocks poised to benefit as mobile computing goes mainstream and is free and available now, but only for a limited time. Get your copy before this offer expires.