Netflix's Facebook Integration Marks Shift Away From Viewing 'Households'
Representing a strategic about-face, Netflix says it is currently baking Facebook into its entire service -- in large part to encourage a segmenting of household accounts into multiple personal accounts.
"We're working on an extensive Facebook integration, which will further the notion of a personal Netflix account," Netflix said in a shareholder letter issued this week.
Netflix accounts have traditionally been affiliated with individual home addresses, but more screens per household -- along with more diverse offerings -- gives Netflix the opportunity to mine households for multiple accounts.
"When we were primarily a DVD-by-mail service, we measured our market in terms of households," Netflix said. "Households subscribed to Netflix and members of the household watched the DVDs as they wanted ... Online streaming video, however, is more naturally individual, since it is watched on personal screens like phones, tablets, and laptops, as well as on shared large screen televisions."
Netflix previously launched social tools, but scrapped them last year after they failed to take off. Mike Hart, previously Netflix's director of engineering for APIs, is now director of engineering for social.
"Our long-term goal is to evolve the Netflix service so that it feels more natural to have a personal account," Netflix said this week. "This evolution from household to personal relationship will take several years, and there will always be some households that only have one account."
In what may prove a challenge to Netflix's social strategy, a recent study found that the TV watching isn't as "social" an experience as one might assume. Rather, just 25% of consumers expressed an interest in sharing what they watch with friends, according to SideReel, which helps users find content and TV shows online.
Going forward, however, that may be the least of Netflix's problems. Its relationship with media companies could soon change when a deal with pay-TV channel Starz to stream movies from Sony and Disney expires. Indeed, Richard Greenfield, an analyst at BTIG research, estimated that the cost of the deal could go up from $25 million a year to more than $250 million a year.
Overall, according to research firm Screen Digest, Netflix revenues for 2010 were expected to reach $2.2 billion.
Netflix's snail-mail business was expected to account for 35% of disc-rental spending in the U.S. in 2010 -- up from 26% in 2009, according to Screen Digest.