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Netflix (NASDAQ: NFLX ) has a content problem. Despite spending billions each year on titles for its streaming service, the selection is far from complete.
And that's by design. Netflix is an unlimited, low-cost provider, meaning it can't offer everything while charging just $8 a month. The benefit in that approach is that it keeps the service affordable for millions of subscribers, even as an add-on to pricey cable bills.
However, under that model the company risks losing customers who search for particular titles only to find out they're not available. The fact that Netflix can deliver "similar" options just doesn't cut it with many users. And that's why the streamer needs people to browse its existing catalog, instead of searching for a given TV show or movie.
Netflix's latest attempt to get users to browse instead of search is with a service it calls "Max," which it just rolled out to Sony PlayStation 3 owners. Described as a guide that "helps you find something great to watch in a fun, conversational way," the Siri-like personality walks you through a few questions with the aim of recommending a single title you'll enjoy watching right then.
Max takes advantage of Netflix's vast amount of user data to deliver in a quick interaction what its welcome screen does with rows of video choices. That is, Max tries to find what you're in the mood for and then tailors recommendations within that genre based on what you and others have liked in the past.
As tempting as it is to write this service off as a gimmick, I wouldn't be so quick to pan the idea. Netflix has a huge catalog of content and keeps incredibly detailed information about all of it. Anything that can make use of that data -- and get users enjoying shows beyond the most popular titles -- is good news for the company.
We won't have to wait long to find out if the service is a hit. Assuming it delivers, Netflix plans to roll it out to other devices besides Sony's PS3, with Apple's iPad likely to be next in line. If Max does make the jump to other Netflix platforms, we'll know that the company has made at least some progress in solving one of its biggest problems.
Will Netflix own the future of television?
Even if it succeeds here, Netflix, along with other new entrants such as Amazon.com have bigger plans aimed at disrupting traditional TV networks. The Motley Fool's new free report "Who Will Own the Future of Television?" details the risks and opportunities in TV. Click here to read the full report!