Media-streaming veteran Netflix (NFLX 0.41%) just rolled out a brand new feature. The content rating system has gained a new option, so now you can tell Netflix that you're really, really into a certain show or movie.
Should investors pay attention to Netflix's "Double Thumbs Up" rating? I don't really think so; here's why.
What's new?
Netflix has expanded its content rating system from two possible grades to three. As of Monday, April 11, the thumbs-up and thumbs-down options have been joined by a double thumbs-up rating.
This choice is meant for content that inspires passion in Netflix users. Here's how the company puts it:
When you love something, you want to tell your family, friends, and coworkers. You want to talk about it all over social media. And you want more of it ASAP. That's why we're introducing Double Thumbs Up.
Films and shows marked with this rating will influence your Netflix recommendations more strongly than content that only inspired a single thumb up or down. Guiding users toward more of the stuff they really like is a good idea since happier viewers are more likely to stay on the service -- and perhaps bring their friends, too.
Furthermore, a more nuanced rating system could help Netflix decide what its customers want to see more of. The company has been data-driven from the beginning, and this looks like a helpful tool in the long run.
Check out the new double thumbs-up option for "Cobra Kai." Image source: Netflix.
What's the big idea?
This update is both a step forward and a throwback to the more complicated rating systems of old.
Netflix used to have an advanced five-star rating system. Other star-based rating platforms typically show you the average rating of other users for content you haven't seen and rated yet. This setup took a different approach, basing its default grade on a deeper analysis of your personal viewing and rating history. In effect, you'd see what grade Netflix thought you might give to each unseen piece of content.
When Netflix tested a simpler thumbs up/thumbs down rating, it found that people would finally treat it as the personalized fine-tuning tool it always was. The number of incoming ratings tripled when Netflix made that change for everyone in 2017.
Again, Netflix doesn't make changes without thoroughly testing them first. In this case, some users have seen the double thumbs-up system in recent months, and it looks like Netflix liked the results of that testing program.
Mind you, most people won't bother to rate what they're watching, regardless of which rating system might be available. Netflix doesn't share the number of user ratings per title, but rival Amazon (AMZN +3.47%) Prime Video does, so let's use a popular Prime Video title as an example.
The first season of Wheel of Time was seen by "tens and tens of millions" of viewers on the premiere weekend, and millions more after that. Yet, the season has fewer than 30,000 ratings in Amazon's five-star system. Furthermore, more than 80% of these ratings were either five-star or one-star varieties, leaving just a handful of more nuanced opinions. One example doesn't make a general rule, but polarized ratings like these seem to support the value of a simplified system.
Tweaking the mechanism might boost the number of opinions to some degree, but it will still be probably only about a fraction of a percent of the audience.
Keep on keeping on, Netflix
That being said, the Netflix shareholder in me appreciates the company's effort to gather more user data. Every media company worth its salt runs its own streaming service nowadays, and Netflix should use every edge it can find in the eternal battle for subscribers and viewing hours. Even a microscopic boost in viewer engagement and improved content recommendations can make a significant difference when you have more than 220 million customers worldwide.
And adding a touch of extra functionality to the rating system is a low-risk move. At worst, the tweak makes no difference and costs the company next to nothing. At best, Netflix could boost its customer loyalty by a measurable amount. That sounds like a reasonable roll of the dice, with the potential for a small upside and no meaningful downside. If anything, I want to see more of these low-risk experiments.
