Netflix Wants to Really Get to Know You

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 (NYSE: BBI), Amazon.com (Nasdaq: AMZN), and Apple (Nasdaq: AAPL). Keep the improvements coming, and there's no reason why movie recommendations couldn't become a product in their own right.

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 (Nasdaq: GOOG) loves to collect and disseminate this kind of information but hasn't really gotten started yet. TiVo (Nasdaq: TIVO) knows something about movie tastes, but publishes to a rather small audience.

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.

Copyright © 2009 Universal Press Syndicate.