There are lots of details that add up to the virtuoso movie-watching experience we know as Netflix
I've been able to list my favorite movie genres for years. That helps Netflix's ratings engine sift through the Netflix library of more than 100,000 DVD titles and more than 12,000 "watch it now" online video streams. If I tell Netflix that I hate horror movies, Dawn of the Dead won't show up in my list of rental suggestions.
Now, the categorization goes far beyond easily definable film genres. A whole new menu system asks how often you'd like to see films in a certain mood (campy, gritty, steamy, and so on), from a particular source (true story, best-seller, classic literature), or released in your favorite decade. And hey -- how old are your kids? All of this information -- the entry of which is voluntary -- goes into your movie recommendations.
The old system was so good that in nearly three years of competition, nobody has been able to claim the $1 million that Netflix offered to anyone who could improve on its solution by at least 10%. The desire to improve seems to go beyond simply beating up on other movie-watching providers and retailers like Blockbuster
Maybe you don't want to rent movies in any way, shape, or form. You might pay Netflix a few bucks per month or per year to simply keep track of your tastes. Tap into a few other information sources about entertainment, and you might get email updates on upcoming movies you would enjoy -- or hate. The same could apply to tonight's TV shows, either by request or streamed directly to your set-top boxes.
There's negligible competition in this rating and potentially taste-making field. I could imagine Amazon stepping up to the plate through its Internet Movie Database property. Google
That's me thinking about future directions. The new rating mechanisms should serve Netflix well in the short term as they may entice us to stick around, which improves the company's vital churn numbers. I'll take that immediate impact even if my long-term vision is way off base.
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Fool contributor Anders Bylund owns shares in Netflix and Google, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like. The Motley Fool is investors writing for investors.