Netflix is so ubiquitous these days that it’s more of a generic term for streaming entertainment than it is a specific brand name. When something becomes such a bedrock of culture, it’s easy to forget to ask, “where did this come from?” but it can be very useful to know. Interestingly, there are two different foundation stories, depending on which founder you ask.
The first version of the story goes like this: CEO Reed Hastings got the idea when Blockbuster charged him $40 of late fees for Apollo 13. Because of this, he went on to have the idea for and found Netflix.
The second version of the story goes like this: Marc Randolph claims that he and Hastings decided they wanted to create “the Amazon.com of something,” in 1977 and decided on DVDs because they would hold up in the mail. They didn’t have a DVD, but they had a CD, which they mailed a few blocks as a trial run. When it arrived in one piece, they determined that Netflix was viable.
A great example of how changing technology can force business change is when Hastings, in 2005, was speaking about streaming video and stated that he did foresee an internet-based future. But he also expected Netflix to dominate DVD video for at least another decade. In 2007, Netflix launched their service.
To show the importance of looking ahead, Netflix started investing just a few percent of revenue each year into creating a streaming service. This was an exciting business proposition not only because of an emerging big business area, but because the mailing costs would be eliminated. Once Netflix has the rights to rent out the movie, the expenses are largely fixed. Netflix then switched over to a subscription model of business rather than a pay-per-rental service, and the rest is quite literally history.
This story is really cool! I never knew the origins of Netflix and its so cool to see that one person found a problem in the DVD market and acted on it to create one of the most popular platforms today. I also love that you added how Netflix had to shift its strategy from disk based to digital based as technology progressed. Its inspiring to see an issue so small can grow into one of the most popular companies today.
This is really a unique and life changing idea. Most people didn’t want to buy movies, and wanted to rent them, but Blockbuster didn’t have the newer titles that everyone wanted. After a few years, Netlfix was able to catch on and change to a digital platform to help keep their business with the times and successful in a failing market. It made movie and Tv show watching at a click of the finger and easy access. I, along with many others, love Netflix. Who knew its identity would take on a whole new form from when it started. Very interesting.
Great Writeup! I remember when my parents would buy the DVDs for Netflix and always forgetting to ship them out. The innovative idea to capitalize on the growing world wide web was an entrepreneurial master piece and revolutionized how we stream today.
Personally, I loved this article and thought it was so great to see the evolution. My family and I have actually been subscribed to Netflix since the start. I remember we would get dvds or tv series on the disk and the days that Netflix came in the mail were so exciting because it met family movie or tv time. They have adapted well with the times and have seen so much success in doing so.
I didn’t realize Netflix started out with only DVD’s, I just assumed they were always a streaming service. Very interesting to learn the origin of such an influential company!
Netflix has been so adaptable. It really is a great example of how entrepreneurial adventures can take you to new avenues. Creating an app made them so adaptable. I remember the first time I saw the Netflix on the app store and thought that everything was changing.