Netflix’s dumbed-down algorithms

By Felix Salmon
January 3, 2014

Alexis Madrigal has a rollicking investigation into Netflix’s movie genres — all 76,897 of them, from category #1 (African-American Crime Documentaries) to category #91,307 (Visually Striking Latin American Comedies). His story is titled “How Netflix Reverse Engineered Hollywood”, and as such, it’s the latest entrant to a well-stocked category of its own: Awestruck Narratives About Netflix’s Technology and the Systematization of the Ineffable.

Netflix has meticulously analyzed and tagged every movie and TV show imaginable. They possess a stockpile of data about Hollywood entertainment that is absolutely unprecedented…

When these tags are combined with millions of users viewing habits, they become Netflix’s competitive advantage. The company’s main goal as a business is to gain and retain subscribers…

Now, they have a terrific advantage in their efforts to produce their own content: Netflix has created a database of American cinematic predilections. The data can’t tell them how to make a TV show, but it can tell them what they should be making. When they create a show like House of Cards, they aren’t guessing at what people want.

I’m something of a curmudgeon when it comes to such stories, however — and it seems to me that there’s an alternative reading to Madrigal’s story, which tells a rather more bearish story about Netflix.

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. Netflix’s biggest fans tend to be parents of young kids — but in a sense, Netflix wants to turn us all into young kids, consuming an endless stream of minimally-differentiated material. (Note that Netflix doesn’t allow you to watch a trailer for a movie before streaming it; it just expects you to stop watching that movie, and start watching something else, if you don’t like it.)

Strategically, this move makes a lot of sense for Netflix. TV shows are cheaper to license than movies are, and people tend to be much more addicted to their TVs than they are to watching movies. And the rise of the micro-genre at Netflix only really makes sense once you understand its TVification. On Netflix, you can binge-watch one reality-TV show, and then watch another, and another; or you can do the same with, say, crime series. They don’t need to be great, they just need to be the kind of thing you like to watch. Which explains why Lilyhammer just started its second season, despite the fact that no one was particularly impressed the first time around.

The original Netflix prediction algorithm — the one which guessed how much you’d like a movie based on your ratings of other movies — was an amazing piece of computer technology, precisely because it managed to find things you didn’t know that you’d love. More than once I would order a movie based on a high predicted rating, and despite the fact that I would never normally think to watch it — and every time it turned out to be great. The next generation of Netflix personalization, by contrast, ratchets the sophistication down a few dozen notches: at this point, it’s just saying “well, you watched one of these Period Pieces About Royalty Based on Real Life, here’s a bunch more”.

Netflix, then, no longer wants to show me the things I want to watch, and it doesn’t even particularly want to show me the stuff I didn’t know I’d love. Instead, it just wants to feed me more and more and more of the same, drawing mainly from a library of second-tier movies and TV shows, and actually making it surprisingly hard to discover the highest-quality content. It’s a bit like what Pandora would be, if Pandora was severely constrained in the songs it could choose from.

This move is surely great for Netflix’s future profitability, and probably helps explain its resurgent share price. If Netflix can provide half of the service that traditional TV offers, at a tenth of the price, that’s a deal which can go a very long way. But it’s also a service aimed squarely at couch potatoes, not at movie lovers.

I don’t find myself with 2.8 spare hours to watch TV very often, and when I do, I want to make those hours count, by watching something great. For me, and for people like me, Netflix’s micro-genres create little more than a frustrating slurry of mediocrity in which it is increasingly difficult to find the gems. I find it much easier to find something I want to watch on the iTunes rental library than I do on Netflix. Normally, I’ll check canistream.it to see whether the film in question is available on Netflix, before I click the “rent” button. But there’s something a bit screwy about a world where I find iTunes to be a more useful discovery mechanism for Netflix material than Netflix itself.

The original version of the post mistakenly listed Shane Ferro as the author. It was in fact written by Felix Salmon.

27 comments

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I still have a star system on my account and I still have an instant queue. I’m not sure I get why you can’t just search for what you want when you want it? Like I want to watch “ET” – won’t it just show up as disc only?

Posted by ALLLL3 | Report as abusive

This is very disappointing. Studios want money, Netflix wants money, and I want to pay money for movies.
Hopefully they will work it out.

But the fact of the matter is, there is an overwhelming amount of content out there. Netflix is an easy one stop venue to see what is available and to get it. But although I love movies, I am not going through the hassle of signing up with every movie studio to get access to their movies. I don’t have time to see everything I might want to see – so studios, lock your content away – you know what??? There are plenty of other pixels on the screen.

Posted by sacramentodan | Report as abusive

The author appears to be unaware of the scientific and engineering work done by Netflix to understand users’ preferences. Netflix recently sponsored the Association for Computing Machinery’s (a learned society for computer scientists) contest on knowldge discovery. In additon, Netflix runs an open source software center that allows developers to fiddle with Netflix.

Secondly, the author is unaware of the high quality content available on Netflix itself. Some of this content is created by Netflix and has received praise by viewers and critics alike. When comments like “When they create a show like House of Cards, they aren’t guessing at what people want” are made, one gets the feeling that the person making said comments is not aware of how Netflix creates content.

Truly, an uniformed article.

Posted by Arnob | Report as abusive

Actually it is far worse than you describe.

Netflix had a system where you could

(a) rate movies and

(b) do a huge endelss questionaire with do you watch Never Rarely SOmtimes Often for endless categoris such as teen, scf-fi, horror, sports, Korean, Indian, animation etc etc etc. Easily took 15-30 minutes to do

ANd a year ago Netflix stopped paying any attention to it.

I threw in the towel and cancelled when it repeatedly offered me

ANimation or anime (Never)

Kiddy catoons (never)

Every Grade F film made in Korea, China and India (Never on those languages)

Teen angst or humor (Never)

The mutant ninja teenager who killed vampires (Never)

ANd other such total endless dreck of the ilk that anyone who had anything to do with making should be shoot.

Hardly of the caliber of The Longest Day or Jeremy Brett as Sherlock Holmes etc etc etc

ANd when they did get a decent series (invariably British) they would only get the first 1 or 2 seasons and leave out the next 2 -6.

Sod Netflix. That garbage is not worth even $7.99 a month.

Posted by onthelake | Report as abusive

Instantwatcher.com has access to NetFlix’s current titles and mashed it up with NYTimes ratings and RottenTomatoes. So I log onto IW’s website and add a movie or three every Monday. This week it was Raging Bull, Not Fade Away, Spaceballs and American Psycho which I added to my list.

I used to use IW because it would tell you when the titles were expiring, ie watch now or lose it, but NetFlix took that functionality away. It is much better than using NetFlix’s own service to find what I might like.

Still, it is as you say, a place to store movies I might watch when I have free time.

Thanks for the post.

Posted by tcolemanuf | Report as abusive

My wife re-subscribed us to Netflix. Alas, I rated the first 200 titles that Netflix sent my way and found precisely NONE that I wanted to watch. None, not any, not one. (Well, there was one, but it would have been a repeat, so it doesn’t really count.)

Then I fantasized an alternative: I’ll start a website that allows people to mark movies as watched, currently-watching, and to-watch. How about if we call it “goodwatches.com”? Then give it access to a user’s address book and Facebook/Twitter accounts so that friends can swap suggestions. Finally, I’ll sell the site to Amazon for $150M. But wait… Amazon already has freebies via Prime, so they wouldn’t want it, would they?

Kind of like I don’t want Netflix. What a total waste of time it has become, to say nothing of a wasteland.

Posted by otinokyad | Report as abusive

I knew something went south with Netflix when ‘Keeping up with Kardashians’ was recommended to me after having rated thousands of movies that gear towards indie flicks.

Posted by dzorlu | Report as abusive

The instant queue still exists, it’s simply been moved to be less obvious and renamed to “My List”. Likewise the star rating predictions still exist, and are available for those who want to use them. I would argue that these are simply “power user” features now.

It seems to me that you are simply complaining that Netflix has changed the front-end of their interface. You say “dumbed down” while I could easily say “more user-friendly”. This opinion piece reads like someone who was used to doing everything on a computer via a command-line interface rejecting a graphical user iterface even though they can still get to the CLI if they want.

Posted by Wumph | Report as abusive

As much as Netflix hates to admit it, the best part of the service is still the DVD’s. It would be nice if they could provide more content from countries other than the US and Britain. As much niche stuff as they have, they should try countries such as Spain.

Posted by whattodo | Report as abusive

I am one of those parents with young kids Netflix must be targeting, however, my kids taste is fairly differentiated. They will exit out of what I’ve picked to find their own show.

Our account was purely a kids one until they set up the profiles. Since then, I’ve consumed all the available episodes of Breaking Bad and Sons of Anarchy. You should see the recommendations I get now. However, I don’t care. I’ll figure out what to watch through another medium. It was nice to get from Netflix, but is not their core competency. What I do like is getting Netflix on my mobile devices (over 50% of my watching is on them). That feeds the addiction. Want to watch an episode on your lunch break, but Netflix is blocked – 3G streaming. How about when assembling some Ikea furniture – use the iPad.

I also had Hulu because it had Rick Steves. However, after months of not using it at all, cancelled. Use amazon prime streaming periodically, but 1/10th Netflix. Only other streaming is ESPN, which is a different model. Netflix is doing OK.

Posted by winstongator | Report as abusive

Your bearish reading of Netflix’s situation is, IMHO, spot on. The IP owners want to make their property as scarce and as expensive as possible, so they will jump at every opportunity to nail Netflix to the wall.

The solution? Stop watching TV and pick up a book instead.

Posted by wtpayne | Report as abusive

2nd-tier movies aren’t interesting because movies are too long of a time commitment. They have to be really solid to spend the time watching (and I have to have confidence of that fact before I start watching) and frankly, I find it hard these days to commit to a movie over 100 minutes if it’s even border-line on whether I’ll like it.

Netflix is awesome for watching TV on my own schedule, but I wonder if I had a DVR (never have) would I even need Netflix? Netflix lacks the sports programming to effectively compete with cable, at least for me, even though it’s about 1/10th of the cost of cable. That’s a whole different bubble, the cost of live sports, but it’s really the only differentiator at this point.

But if Netflix is turning into streaming TV, why wouldn’t cable companies get into that business and bundle it with their packages? They already have the connection, and I would guess more bandwidth than Netflix, into the home. They’re already broadcasting the content on it’s 1st run so how hard could it be to convince the IP owners to let them archive and re-broadcast it on demand?

Posted by Harpstein1 | Report as abusive

I don’t think that Netflix’s focus on binge-content is a bad thing. They’ve found a niche and are successful in bringing it to their subscribers. We can be nostalgic about a time when Netflix was about movies, but the fact that they’ve changed focuses and maximized their efficiency in bringing great binge-watching content is not something to cry about. If I want to watch movies, like the author, I rent them on iTunes. If I want to watch current season television, I go to Hulu. But if I’ve never seen breaking bad and want to get caught up, there’s no better place to do it than Netflix. They’re the absolute best at what they do, and I’m glad they’ve streamlined their services so that they can make this possible. Saying that Netflix is just for couch potatoes (and suggesting that people who watch great movies are somehow superior) is just elitist drivel.

Posted by Anonymous | Report as abusive

As an aside, Pandora DOES offer only a limited selection of songs…IF you’re not looking for hip-hop or contemporary pop. Try adding, say, Pat Metheny as a “station” and see how quickly you get to repeating songs.

Posted by sUche2tu | Report as abusive

You are way too movie focused. The fact is that TV is getting better, while movies are getting steadily worse… so long term how is Netflix worse off for having a far better TV offering than it is movies? I can still get discs for the handful of movies I want to see, and sometimes Netflix does stream the occasional movie I like for a limited time. That’s plenty good enough movie fare for me while I enjoy the far deeper riches the TV offerings provide.

Netflix is doing the smart thing, spending money to maximize the amount of content people want to watch, while avoiding being ripped off by greedy movie studios. The studios can try movie silos all day long, they will come crawling back to Netflix someday desperate for ANY digital revenue stream.

Posted by SirBill | Report as abusive

SOME TV is getting better, but MOST television is still plagued by extremely mediocre storytelling. Nearly everything on the traditional networks is disposable. A few of the premium networks are producing better television than we’ve ever seen (HBO, AMC, etc.), but for every truly great show on a premium cable network (Breaking Bad, Mad Men, the Wire), there is a still a glut of lameness, where bad, uneven, cliched, or just mediocre writing is still king (The Walking Dead lumbers to mind). To me, the interesting question is Why do so many, many TV viewers accept and even celebrate second-rate storytelling? Why, as Felix Salmon asks, do television “audiences have much lower quality thresholds”? I think it has something to do with audiences being raised on decades of terrible television; they no longer are able to distinguish good storytelling from bad. They eagerly accept slack plotting, characterization that make so sense, and endless repetition because after so many years of indoctrination to the low standards of network television, they’ve become inured to bad storytelling.

Posted by Mabuse | Report as abusive

I think the key point the author is missing is that the Netflix he is longing for, the Netflix he remembers, still exists. In fact, it hasn’t gone anywhere, or changed much about its behavior. It still has all the movies. It still has (and uses) the same great algorithms re: star ratings. (Want the long list of “how often to you watch [x] genre” questions, and the personalized recommendations based on that and your star ratings? It’s still there under ‘Taste Profile’.) It still offers a queue, you can still ‘save’ new and as-yet-unreleased movies to that queue, and once they’re available on DVD, you’ll still get them.

The clue is in that last sentence: The Netflix you’re looking for, the Netflix of yore, is a DVDs-by-mail service.

The semi-recently launched a sister-service that allows you to stream video online. When they were first testing it, they provided it free to all Netflix subscribers. Later (and to much chagrin) they began charging separately for their traditional discs-by-mail service and their new online-streaming service. The one does not replace or replicate the other. As you observe, one (streaming) is good for binge-watching TV shows while the other is better at providing a near-infinite catalog a couple of discs at a time. If you misunderstood that Netflix’s streaming service ($7.99/mo) would be inferior to the old-default 3-discs-a-month plan ($15.99/mo), you probably didn’t think it through:

With the old discs plan, you probably paid between $1.50 and $3 per movie, if you were diligent about watching and returning the discs in a timely fashion, and had access to the full quality range of “all movies on DVD”. With streaming you probably watch a lot more than 2 to 5 movies per month—in fact, if you expect to watch the same quantity of movies per month for half as much money, it seems only logical to expect the quality of those movies/selection to be half as good. If you expect to be able to stream 3+ hours of programming a day, it would be reasonable to expect the quality to be roughly 6 times worse than what you were getting on the discs plan, from a purely economic perspective.

Then there’s another perspective: The one where you *don’t* cancel your discs plan, and still pay for the streaming plan. In this situation, you retain all the benefits of the old Netflix, while gaining all the benefits of their new streaming service (limited-to-you though they may be). From this perspective, Netflix is just getting better and better. Maybe the streaming service can’t compete with the discs-by-mail service (at this time), but it certainly complements it well enough.

Posted by TeelMcClanahan | Report as abusive

Outside the US, the Netflix catalogue is even smaller.

I’m one of the founders of a UK startup, Tank Top TV, where we aim to help people find movies & TV shows they want to watch. There are literally dozens of on-demand services in this country, each of which has a unique catalogue. Some are free to watch and some are pay-as-you-go or subscription, so it’s pretty common for people to use multiple services regularly.

So we built a site to make it easy to see what’s available on all the different services you use. Sadly, Netflix asked us not to include them, even though our users say that our site makes it much easier to find something to watch from Netflix’s content!

Netflix is a great service in many ways, but a LOT of users don’t find it easy to discover good content to watch on it. They shut down access to their API for new users ages ago (and in fact never opened it for catalogues outside the US). It’s a real shame they don’t allow 3rd parties to do more to help people find their content.

Posted by LizRice | Report as abusive

Felix, could you clarify whether Netflix STILL uses the original algorithm for DVDs-by-mail? Or have they dropped it for that too?

Posted by JPHuie | Report as abusive

I signed up for Netflix streaming recently, after having been a DVD guy a while back, and it is immediately clear that Netflix is desperately trying to obscure their tiny inventory.

“Where,” I asked the customer service rep, “is the list of movies, ordered by year, or genre or rating?”

Can’t do that with streaming, he says. The site looks like frigging pinterest now because the site has “evolved.”

Posted by turkeybrain | Report as abusive

its called netFLIX… this has always frustrated me so much and its getting worse… so much mediocre TV… I would pay a LOT more for a service that only gave us films, classics, blockbusters, etc and helped me discover real films I know I’d love.

Posted by anon275 | Report as abusive

“TeelMcClanahaN”

this comment is the correct one. I am not sure how Felix could write such a misguided article. Everything he likes about Netflix is still there, the streaming service just doesn’t offer it. Why would it?

It is still a tremendous value. For nearly a decade Netflix has been my family’s sole visual entertainment expense.

It replaces going to the movies, renting movies, cable TV, buying DVDs, buying TV shows. We don’t do any of that anymore.

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