Felix Salmon decries Netflix’s dumbed-down algorithms:
Netflix’s big problem, it seems to me, is that it can’t afford the content that its subscribers most want to watch. It could try to buy streaming rights to every major Hollywood blockbuster in history — but doing so would cost hundreds of billions of dollars, and could never be recouped with $7.99 monthly fees. What’s more, the studios can watch the Netflix share price as easily as anybody else, and when they see it ending 2013 at $360 a share, valuing the company at well over $20 billion, that’s their sign to start raising rates sharply during the next round of negotiations. Which in turn helps explain why Netflix is losing so many great movies.
As a result, Netflix can’t, any longer, aspire to be the service which allows you to watch the movies you want to watch. That’s how it started off, and that’s what it still is, on its legacy DVDs-by-mail service. But if you don’t get DVDs by mail, Netflix has made a key tactical decision to kill your queue — the list of movies that you want to watch. Once upon a time, when a movie came out and garnered good reviews, you could add it to your list, long before it was available on DVD, in the knowledge that it would always become available eventually. If you’re a streaming subscriber, however, that’s not possible: if you give Netflix a list of all the movies you want to watch, the proportion available for streaming is going to be so embarrassingly low that the company decided not to even give you that option any more. While Amazon has orders of magnitude more books than your local bookseller ever had, Netflix probably has fewer movies available for streaming than your local VHS rental store had decades ago. At least if you’re looking only in the “short head” — the films everybody’s heard of and is talking about, and which comprise the majority of movie-viewing demand.
So Netflix has been forced to attempt a distant second-best: scouring its own limited library for the films it thinks you’ll like, rather than simply looking for the specific movies which it knows (because you told it) that you definitely want to watch. This, from a consumer perspective, is not an improvement.
What’s more, with its concentration on streaming rather than DVDs by mail, Netflix has given up on its star-based ratings system, and instead uses what it calls “implicit preferences” derived from “recent plays, ratings, and other interactions”. Again, I’m not sure this is an improvement — but it does fit in a much bigger strategic move chez Netflix. While Madrigal and I might still think of Netflix as an online version of your old neighborhood Blockbuster Video store, Netflix itself wants to replace something which accumulates many more viewer-eyeball-hours than Blockbuster ever did. It doesn’t want to be movies: it wants to be TV. That’s why it’s making original programming, and that’s why the options which come up on your Netflix screen when you first sign in are increasingly TV shows rather than movies.
One huge difference between TV and movies is that audiences have much lower quality thresholds for the former than they do for the latter. The average American spends 2.83 hours per day watching TV — that’s not much less than the 3.19 hours per day spent working. And while some TV is extremely good, most of it, frankly, isn’t.
Television stations learned many years ago the difference between maximizing perceived quality, on the one hand, and maximizing hours spent watching, on the other. Netflix has long since started making the same distinction: it wants to serve up a constant stream of content for you to be able to watch in vast quantities, rather than sending individual precious DVDs where you will be very disappointed if they fall below your expectations.
I see it as more of a Moneyball strategy. Provide customers with content they don’t know they’ll like as much as cable TV, but for much, much less than cable TV.
And, as one commenter noted, if you want to watch highly regarded movies on Netflix, you can — InstandWatcher maintains multiple lists of Netflix’s offerings against New York Times critics’ picks, Rotten Tomatoes fresh picks, etc.