The Netflix (NASDAQ: NFLX ) march of evolution continues. Last year, Netflix
began its full transition to a purely streaming video service rather than a
by-mail DVD rental company, a move that helped the company expand dramatically
in just a few short months. Now Netflix is evolving and diversifying its
successful business model. Earlier this summer, it drastically realigned its
subscription pricing , a move that enraged consumers but will help the company
do away with its DVD and Blu-ray business entirely on a long enough timeline.
Consumers will get over the perceived price hike, especially now that Netflix is
finally finding ways to cater to specific audiences, starting with your kids. A
Friday report at GigaOM said that Netflix has started testing a brand-new
version of its website that includes a Just for Kids item in its main menu.
Users that have access to that option can then activate an entirely new menu
system at Netflix.com one that replaces rows of movie posters with a selection
of popular childrens characters to lead to different video sections. Clicking on
Big Bird leads to the Sesame Street videos, and the same works for Strawberry
Shortcake. Netflix hasnt announced when it will make the new interface available
for all users. Of course, Netflix likely wont make the interface available for
all users. The new user interface is the first component in larger plans Netflix
has been hinting at for months, namely the introduction of family plans to its
current subscription structure. Family plans will let Netflix subscribers with a
big family watch multiple streaming videos on different devices using the same
login information. Put another way, while Dad is watching The Bourne Ultimatum ,
Mom can be upstairs watching Buffy the Vampire Slayer , little Mamie can be
watching Blues Clues on the family computer, and little Ike can be watching Iron
Man on the Xbox 360 in the basement. Essentially, kids will be able to use their
own version of the service simultaneously as the parents, and its a guarantee
that Netflix will charge additional fees for the service and increase its bottom
line. Eventually, at least. Netflix wont altering its pricing again this year.
To do so would be disastrous, causing an outcry from consumers that will cause
lasting damage to the companys subscription base where the recent changes merely
rankled. In 2012 and beyond, though, family plans and audience specialization
like the new Just for Kids interface will be how Netflix continues to grow. Its
a strategy that will see niche audiences paying larger subscription fees for
premium programming or even smaller fees for a more limited range of
programming. Netflix could introduce a TV Only subscription model, and it could
significantly broaden its base of users by charging a smaller fee for that
access. Investors worried that Netflix is in trouble with consumers because of
the subscription price changes should stop stressing. Everything is going
according to plan. As of this writing, Anthony John Agnello did not own a
position in any of the stocks named here. Follow him on Twitter at
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