When Marc Randolph and Reed Hastings decided to form their own company in 1997, they weren’t even thinking about movies at first. They considered personalized dog food, sporting goods like surfboards and baseball bats, and shampoo when trying to come up with a business. One day, Reed Hastings became frustrated when he owed $40 in late fees for a rental of Apollo 13 he forgot to return to Blockbuster, a video rental store. DVDs had just been invented, and he thought there had to be a better way to watch movies without all the hassle. After Marc Randolph mailed one as a test to make sure it would not be damaged, Netflix was born.
When Netflix launched in 1998, customers could order one movie at a time, which would arrive at their home via mail. Once they returned it, they would receive a new one. In 1999 Netflix changed to a subscription model, charging customers a monthly rate. This made customers more likely to rent more than one movie, since they were locked in to paying for an entire month. Netflix also gave customers a queue, which sped up the process for their next movie to arrive.
The subscription model was so successful that in 2000, Netflix changed to an unlimited rental program. Customers could rent an unlimited number of movies per month, and all shipping and late fee charges were eliminated. This program was wildly successful, but Netflix was losing money. Reed Hastings approached the CEO of Blockbuster and offered to sell him a 49 percent share of the company for $50 million. Blockbuster passed on the deal, and eventually could not compete with Netflix’s two key advantages – no stores (which meant no operating costs and the ability to serve customers anywhere) and no late fees. Blockbuster eventually filed for bankruptcy in 2010.
In 2007, Netflix launched their streaming service, called “Watch Now.” Initially, it was an add-on to the DVD business with only 1000 titles, and was only available on PCs and Internet Explorer. But eventually, the focus shifted, as Netflix became “a streaming company which also offers DVDs by mail.” Netflix tried to spin off its DVD business into a separate company called Qwikster, but the attempt was short lived and abandoned after a month after shareholder and customer complaints. While some customers continued to rent DVDs, many came to appreciate being able to watch content instantly and eventually download it on their devices to take with them anywhere.
Netflix started creating its own content in 2012. In 2013, it would be the first internet network to be nominated for a Primetime Emmy for House of Cards. In 2017 it won its first Academy Award for Best Documentary Short Subject for The White Helmets. Today, Netflix creates some of the most talked about programming in pop culture, such as Stranger Things, Squid Game, and Bridgerton. Stranger Things season four is the most watched title in Netflix history, with over 781 million hours viewed in seventeen days.
Netflix does have some negative effects on consumers. By having the next episode of a series start within 5 seconds of the end of the previous episode, people are tempted to binge watch. Binge watching has been associated with heart disease and weight gain (due to lack of physical activity), eye strain, and sleep deprivation.
Netflix has changed the way people all over the world consume entertainment. There are thousands of movies and shows to choose from with a click – including popular movies and television shows, original content, children's programming, and documentaries. You can watch for as long as you like, any time day or night, in the comfort of your own home or on the go. Today, Netflix has over 221 million subscribers that “Netflix and chill.”
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