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Five reasons Netflix may become the bargain bin of streaming services

DVDs are dying

Currently, the massive gaps in Netflix’s Internet Streaming service can be augmented by the more than 100,000 DVDs available in its DVD-by-mail library. In the DVD world, Netflix is still competitive. It gets DVDs about a month after they hit store shelves, but nearly every new TV and film release is available, as is almost every old piece of content you could imagine. But DVDs are on the outs. Sales are dropping steadily and consumers are consistently moving toward Internet downloading and streaming services instead of physical discs. It will not happen overnight, but DVD-by-mail is becoming a service few will bother paying for. Netflix itself has realized this trend; the company has been distancing itself from physical media, adding a streaming-only subscription plan for $7.99 last November.

While its reasonable for Netflix to abandon DVDs, those who opt for streaming-only are trading convenience for access to only 10 percent of Netflix’s content. Studies show that Netflix customers are very happy with their streaming services right now, but its likely that most of them haven’t tapped through the 12,000 or so streaming titles available. Over time, Netflix will lose out on business if it doesn’t find a way to make available the 90,000-ish movies and TV shows that are exclusive to physical media right now. There will always be people willing to pay to access a pool of movies, but many people will want to know that they’re favorite TV shows and movies are available. This pressure will increase as competitors emerge.

Poor promotion of available content

Movie collections: We’ve established that Netflix will need to bolster its library of stream-able titles if it hopes to become more than a bargain bin for old content. However, simply obtaining new movies isn’t enough. Netflix has no method for promoting new content. Sure, it has a “new releases” section and Starz has its own tab in browsers, but the company relies on the strength of its movie recommendation engine to do the majority of work for it. While it is a good engine, this is a mistake. Netflix needs to do a better job of promoting its premium content offerings. Currently, titles hit the “new releases” section for a while and then disappear into the fold. The Criterion Collection is a good example of content lost in the Netflix archive. The collection includes more than 150 classic films by renowned filmmakers including Jean-Luc Godard, Akira Kurosawa, Terry Gilliam, Luis Bunuel, Frederico Fellini, Wes Anderson, Alfred Hitchcock, and Charlie Chaplin.

Last week, the Criterion Collection abandoned Netflix for Hulu. Why? The company explained the departure in a Facebook post. “It has never been easy to find Criterion movies on Netflix — ‘Criterion’ is not even a searchable term there. Compare that with Hulu’s willingness to develop a whole area of their site around us, brand the films associated with us, and develop the capability to show many of our supplements alongside our films.”

Granted, the Criterion Collection is mostly a collection for film enthusiasts, but Netflix did not even have a proper profile page for it. Hulu offers a better value for content holders like Criterion. With Hulu, Criterion gets a profile page, can be featured in various sections of the site, can release clips, and can likely collect ad revenues for those who stream its content on Hulu or Hulu Plus.

Netflix SNL pageEpisodic TV: It gets worse. Because Netflix was built with DVDs in mind, it isn’t currently equipped to properly bundle TV shows. In its NBC deal last September, Netflix gained the rights to stream new episodes of Saturday Night Live a day after they aired. A quick check on the SNL Season 36 page of Netflix shows that this deal did indeed go into effect, but I’ve been using Netflix for months and never knew it offered new episodes of anything. Unless you search out SNL specifically and stumble into the Season 36 page, you would never know Netflix had new episodes of SNL. Because Netflix still groups all of its TV shows into seasons and doesn’t have pages for each episode, it’s impossible for the service to properly notify its users that a new episode has been added to the service. There also isn’t a proper landing page for all of Saturday Night Live. A search will bring you the option to show all of the seasons, but they are laid out like a group of DVDs. The Netflix DVD-display model works when looking at a bunch of movies, but it is ineffective when searching for episodic programming.

Netflix does have profile pages for movie stars like Alec Baldwin and other groups of films and shows, but they are only accessible on the PC version of the service (as far as I can tell). Hopefully it will find ways to further leverage collections of films and shows it already has. Why can’t users become fans of a particular director, writer, or movie star? This would greatly improve Netflix’s recommendation engine.

Hulu, a top competitor built around TV, has solved a number of these problems.

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