How Netflix's Next Advancement Will Change The Streaming Race

| About: Netflix, Inc. (NFLX)

Summary

Netflix has always maintained an edge in creativity and innovation over its rivals but there is one area they are getting beat – offline.

Netflix’s always been opposed to the idea, claiming everything from it not being a valuable addition to the belief it will cause a “paralysis by analysis” type scenario with subscribers.

A new rumor out suggests Netflix may finally be changing its mind and that would be a game-changer for the streaming industry.

By this point in Netflix's (NASDAQ:NFLX) life cycle a lot of the streaming leader's biggest news revolves around its programming. So when a rumor pops up about a change in the system itself analysts takes notice, as was the case late last week.

The latest "report" is that Netflix will unveil an "offline" option by year's end which to put it simply is a game-changer. Now to be clear it's not a game-changer because it's such a huge technological innovation, it's a game-changer because it so far it has been one of the biggest differentiators between Netflix and its main rivals.

Currently Apple is the king in "to-go" options and Amazon, through its Fire tablets, has quietly built a very strong presence. Netflix… not so much.

As you likely do before you travel, either for business or pleasure, many people go and download entertainment options. Yet given the $6 billion in content Netflix pipes into its pages not giving their subscribers that option is a massive missed opportunity for the streaming leader.

It's actually somewhat surprisingly Netflix hasn't gone down the "offline" road by this point as the feature could bring in a number of benefits. The first one being it's a great lure to sign new subscribers (while keeping current ones) and as a secondary benefit, it disrupts piracy. A big reason for people to download Netflix content from "other" sources is that they couldn't legally download it to their device.

So what's the holdup? Why is this the one area Netflix isn't involved in?

Surprisingly it has to do with a misconception by the company's executive team. Simply put Netflix claims it doesn't believe it brings value to its subscriber base with chief product officer Neil Hunt saying as recently as last year "I still don't think it's a very compelling proposition."

With all due respect to Mr. Hunt… he's wrong. As someone who uses the Amazon Fire tablet to watch Amazon's programming, it a big validation for the $99 annual fee I pay for the Prime service.

With all of Netflix's content, both current and announced for the future it is remarkable to me that the company would be that shortsighted. Although to be fair Netflix did supply a longer form reason to tech site Gizmodo about why they haven't enabled this option…granted it is not a good one.

"One of the things I've learned is that every time you offer a choice, you paralyze some people who can't decide if that's what they want to do or not. Now, that sounds really stupid and self-serving, but it is in fact true. It's the 'Paradox of Choice', the jam experiment - you put strawberry, apricot and blackberry jam in the supermarket aisle and you can persuade half the people coming down the aisle to taste the jam and maybe buy one. But if you decide to add lemon, orange, blueberry and grapefruit, by adding the choices you don't increase the number of people choosing one, but in fact you go the other way. Fewer people choose anything at all."

So basically what is being said is that they people get to easily overwhelmed when you give them so many options that they'll choose nothing and that validates why Netflix shouldn't waste their time on this option.

Let that sink in.

No seriously, let that sink in, because for a disruptor like Netflix to claim this option isn't in the best interest of their subscribers because it may confuse them is ludicrous and somewhat insulting. Netflix's own main menu system is just as ridiculously over-whelming in its own right and people still clearly use the service. So why would a download and go option not be as highly utilized?

Even if this service only works for Netflix originals, it would still be a big step in the right direction and one that will further put them ahead of their rivals. The truth is there is no valid reason Netflix could give for NOT doing this, with the exception of they just don't want to create one.

And honestly if that was the case, that's okay.

It's not ideal and it's not practical but it is their prerogative and with the type of numbers the service pulls in annually they can afford to put their time and effort elsewhere…for now.

Netflix's rivals are coming at them even harder than ever and they need to keep up with the times. The ironic part is that's never been a problem for them, but now they must see the writing on the wall and that's probably what has led to this flip in policy.

Now keep in mind none of this news is coming through official channels and is all rumor and conjecture, so Netflix's current stance could end up staying intact. Yet for the first time in a while this seems like it could actually happen… and that's exciting.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.