Netflix Bets On A Shorter List Of Movies

Video rental company Netflix Inc. (NFLX) is now betting it knows much more about its 10 million subscribers.

It recently introduced important changes to the tools that automatically flag a subscribers' movies of interest based on their rental and ratings history. The result is a bigger guess on Netflix's part about their subscribers' tastes.

For example, Netflix used to recommend a long list of crime movies to customers who had rented movies like "Clockers" and "Goodfellas." As a result of the changes, the same subscriber would now see a shorter list of "crime thrillers based on contemporary literature" instead. Someone favoring Woody Allen's "Manhattan" sees a list of "critically acclaimed witty comedies," rather than general comedies.

The new wrinkles, two years in the making, arrive at a crucial time for Netflix, which is facing increased competition from Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Blockbuster Inc. (BBI) and other big name tech firms that have ratcheted up their movie and TV show rental businesses. Since each firm rents or sells many of the same movies, a key selling point is the experience their customers have choosing films.

"If one out of the three movies you watch from Netflix is just what you wanted, and we can now move that to two out of three, then it's a big bonus for everybody," a Netflix spokesman said Thursday.

Netflix shares up 2.5% to $47.77.

-By Ben Charny, Dow Jones Newswires; 415-765-8230; [e-mail]