Is Another Netflix Service Split Coming?

Rick Aristotle Munarriz, The Motley Fool
Updated

Are you a film buff or a fan of television?

Netflix (NAS: NFLX) recognizes the difference, and it's testing a redesign that splits the difference.

According to The Los Angeles Times, Netflix is serving up a new prototype of its streaming landing page to a small group of customers. There are separate tabs for movies and TV. If the video service provider finds that users seeing the dual tabs are consuming more video or are more likely to stick around, you can be sure that the redesign will roll out to all of its 23.4 million stateside streaming accounts.


Netflix's original DVD-based service was primarily seen as a movie rental service, and rightfully so. The company's biggest competitors -- DISH Network's (NAS: DISH) Blockbuster and Coinstar's (NAS: CSTR) Redbox -- rely on new film releases on DVD and Blu-ray. Television shows on disc just take too long to go through as rentals, though Netflix relished those rentals since it meant longer gaps between bankrolling roundtrip shipping costs.

However, Netflix's streaming service has become a popular source for subscribers to catch up on prior seasons of TV shows.

Netflix content chief Ted Sarandos conceded that 50% to 60% of the service's streams are for television shows late last year. It's easy to see why.

  • Netflix's catalog is sorely lacking in movies, particularly the new releases that drive the traffic at Redbox and Blockbuster.

  • The lack of having to wait at least two days between rentals means that streaming customers can go through more video. This is a selling point for Netflix, but something that exposes its shortcoming on the new movie front.

  • TV studios have warmed up to striking licensing deals with Netflix for past seasons. It not only creates incremental revenue, but also builds a larger audience. When the fifth season of AMC's (NAS: AMCX) Mad Men kicked off with a 20% spike in ratings earlier this year, Netflix was quick to point out how the first four seasons being added to its streaming library helped get a new audience up to speed.

Netflix wears the "rerun TV" badge with pride, leaving Hulu and the networks themselves to stream ad-supported episodes of current seasons.

Splitting the streaming site into the two tabs will make it easier to navigate. The move will also make it easier if Netflix should decide to offer either TV or movies as standalone plans at cheaper price points. Now it's just a matter of waiting to see how Netflix's test audiences react to the change.

Stream on
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At the time thisarticle was published The Motley Fool owns shares of Netflix. Motley Fool newsletter services have recommended buying shares of Netflix and Coinstar. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.Longtime Fool contributor Rick Munarriz has been a Netflix subscriber and shareholder since 2002. He does not own shares in any of the other stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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