Is Netflix Fixing What Isn't Broken?

Netflix (NASDAQ: NFLX  ) may be the world's most popular streaming service, with more than 40 million accounts, but you won't see it buffering on complacency. Netflix is revamping the interface that many of its viewers engage with as they stream content through video-game consoles and other set-top devices.

The move comes at a time when Netflix seems to be doing no wrong. Netflix closed out its latest quarter with 40.3 million streaming subscribers worldwide, and the midpoint of its guidance calls for it to be at 43.6 million streaming accounts by the end of next month. "If it's not broken, don't fix it," is an old adage, but Netflix is still rolling out a new platform that it believes will make the leading video platform even stickier than it already was.

The new interface relies less on the rectangular cover art for individual titles that members put in their queues and more on shows that they are likely to enjoy based on viewing history, ratings, social sharing, and other proactive measures to allow the discovery of new content. 

"There's nothing new on Nexflix," is a popular knock on Netflix given the "rerun TV" label that it proudly wears and the stingy nature of movie studios that hold back on offering newer releases to drum up retail sales and piecemeal rentals. This approach hopes to tackle that complaint by getting subscribers to dig into content that they may not realize is right up their alley. 

Netflix has been playing digital matchmaker for years, but it's making it a bigger part of the sorting experience with the new interface. The goal here is that the more that subscribers lean on Netflix's judgment here than their own, the less likely they are to cancel. It makes sense. They will be more engaged, and if Netflix succeeds, it will become an indispensable tastemaker of personalized video streams.

Why change now?

Well, there are a few things coming into play in the coming days that would seem to make this as good a time as any to break out the new interface. For starters, it's probably not a coincidence that this is initially rolling out to those streaming Netflix through video game consoles hooked up to their TVs. The new PS4 hits the market on Friday, and the Xbox One follows a week later. As diehard gamers upgrade to the new platforms that are rich in features for streaming video, Netflix may as well spring a new look.

We also can't ignore that Amazon.com's (NASDAQ: AMZN  ) foray into original programming -- beyond pilots -- kicks off on Friday with the debut of Alpha House. This is the first of five shows that Amazon Prime viewers voted for when the leading online retailer offered up a series of pilots for them to pick the shows that it would bankroll. This is also the one with the most prolific cast. The political comedy is unlikely to have the same impact as House of Cards, but Amazon's platform will generate a fair amount of publicity this weekend. Netflix may as well counter its distant rival with something new of its own.

Netflix stopped publishing its quarterly churn metric a couple of years ago, so we won't know if the new interface is successful in keeping subscribers around longer. Netflix may or may not offer up this information, but it's a safe bet that if the new interface sticks in a few months, it's working. 

Your living room is a battleground
The future of television begins now... with an all-out $2.2 trillion media war that pits cable companies against technology giants like Amazon and Netflix. The Motley Fool's shocking video presentation reveals the secret Steve Jobs took to his grave, and explains why the only real winners are these three lesser-known power players that film your favorite shows. Click here to watch today!


Read/Post Comments (0) | Recommend This Article (0)

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.

Be the first one to comment on this article.

DocumentId: 2725394, ~/Articles/ArticleHandler.aspx, 4/20/2014 4:02:44 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement