The history of Netflix - TecMundo

Summary

Netflix, founded in 1997 by Reed Hastings and Marc Randolph, has evolved from a DVD rental service to a global streaming giant. Despite early setbacks, including missed acquisition opportunities by Amazon and Blockbuster, Netflix's transition to a subscription-based model in 1999 and its move to streaming in 2007 revolutionized entertainment. With major investments in original content, like 'House of Cards,' and its global expansion, Netflix reshaped cinema, television, and internet culture. It has faced both praise and controversy, particularly regarding its original content and impact on traditional media. Today, Netflix is a household name with millions of subscribers worldwide.

Takeaways

• 😀 Netflix was founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California.
• 😀 The company started as a DVD rental service through mail, not streaming, with no monthly subscription initially.
• 😀 Netflix's first major change was adopting the subscription-based model in 1999, where customers could rent as many DVDs as they wanted for a flat fee.
• 😀 Despite being offered $12 million by Jeff Bezos in 1998 and $50 million by Blockbuster in 2000, Netflix turned down both buyout offers, making bold decisions that paid off.
• 😀 In 2007, Netflix introduced streaming, marking the shift from DVD rentals to online content distribution.
• 😀 Netflix ran a $1 million competition in 2006 to develop an improved recommendation algorithm, although it wasn't implemented due to high engineering costs.
• 😀 Netflix's international expansion began in 2010 with Canada, and by 2017, it had reached over 190 countries, though some regions remain restricted.
• 😀 A major technical setback in 2008, where Netflix's database failure resulted in a three-day halt of DVD shipments, led to a shift to cloud computing with Amazon Web Services.
• 😀 In 2011, Netflix's attempt to separate its DVD and streaming businesses under different names (Netflix and Qwikster) backfired, leading to an apology and the cancellation of the plan.
• 😀 Netflix's shift to producing original content began with 'House of Cards' in 2013, which became a major success and earned multiple award nominations.

Q & A

What was the original business model of Netflix before it switched to a subscription-based service?

Initially, Netflix operated with a mail-order system where customers would order movies online, and DVDs would be delivered to their homes. There were no monthly subscriptions; instead, customers would rent DVDs individually, paying for each title they ordered.

Who were the co-founders of Netflix and what were their backgrounds?

Netflix was founded by Reed Hastings, who had a background in mathematics and artificial intelligence, and Marc Randolph, who specialized in advertising and sales. Hastings had previously co-founded Pure Software, which created successful debugging software for Unix.

What was the significant change in Netflix's business model in 1999?

In 1999, Netflix introduced a subscription-based service, allowing customers to pay a flat fee and rent as many DVDs as they wanted without worrying about late fees, which helped Netflix become famous.

What were the two major companies that almost bought Netflix in its early years?

In 1998, Netflix was offered for purchase by Amazon for $12 million, and in 2000, Blockbuster offered to buy the company for $50 million. Both offers were rejected.

What technological shift did Netflix undergo in 2008, and what was its result?

In 2008, Netflix faced technical issues with its database, which led to a major shift towards cloud computing. They partnered with Amazon Web Services, which helped streamline their operations and improve the delivery of services.

What was the main reason Netflix faced criticism after its 2011 separation of DVD and streaming services?

The separation of DVD and streaming services into two distinct businesses, Netflix for streaming and Qwikster for DVDs, angered customers due to price increases and the inconvenience of managing two separate subscriptions. This decision was quickly reversed after backlash.

What was Netflix's first original series, and how successful was it?

Netflix's first original series was 'House of Cards,' which debuted in 2013. It was a major success, receiving multiple Emmy nominations and winning two Golden Globes.

How did Netflix's content strategy change to counter increasing competition?

To combat increasing competition, Netflix shifted to producing more original content, including movies and series. They also acquired the rights to independent productions, helping to differentiate their offerings from those of competitors like HBO and Fox.

What impact did Netflix's streaming service have on the television and movie industries?

Netflix revolutionized the way people consumed TV and movies by popularizing streaming. Its success led to the rise of other streaming platforms, and its original content became a major force in reshaping the entertainment industry.

How did Netflix's expansion into global markets affect its growth?

Netflix expanded internationally, debuting in Canada in 2010 and later in over 190 countries. This expansion significantly boosted its growth, making it one of the leading global entertainment platforms with over 94 million subscribers by 2017.