The Journey of Netflix — From a DVD Rental Site to Tech Giant
When you think Netflix, you think binge-watching movies and series! But did you know Netflix used to be a small DVD rental site? Starting out as a small DVD rental site, Netflix has come a long way to transform itself to becoming an internet giant. Netflix is the world’s leading streaming entertainment service.
The name Netflix is a combination of ‘Net’ in the word ‘internet’ and ‘Flix’ which is a variation of ‘flick’, abbreviation for movie. Netflix was founded on August of 1997 by entrepreneurs Reed Hastings and Marc Rudolph as an upstart DVD rental business. In 20 years since its foundation, the startup has transformed from renting movies to making them one of the biggest TV and movie studios globally.
Netflix’s Innovation to Become a $100 Billion Company in 20 Years
From Pay-for-Use to Subscription Service
Originally, Netflix began with a rent-by-mail DVD model in 1997. At the time of the foundation, video rental stores dominated the home entertainment market. Netflix invested in the opportunity to do rentals differently and introduced renting out DVDs by mail. Users could order films via the internet from the website and have them delivered to their door.
Netflix took over their initial competitor, Blockbuster who at the time offered DVD rental at their rental stores, by shifting to subscription service. Netflix changed its pay-for-use model to a subscription model delivering on-demand entertainment that allowed users to watch their favorite shows at anytime and anywhere they wanted. Similarly, Netflix rebranded and the logos changed over the years.
Introduction of Streaming Service
Following the initial success of the rental model, Netflix went public in 2002 with around 600,000 members subscribed and by 2003 had grown its customer base to 1 million subscribers. At the time, the stock was worth less than $2 a share. The introduction of streaming service in 2007 marked the biggest turning point for Netflix. Netflix introduced the ‘Watch Now’ concept with initially 1000 titles and changed the way people spent their free time by allowing users to watch content online instantly.
In the years 2008 – 2010, Netflix went on to partner with different electronic companies and devices including Xbox, Blu-ray disc players, PS3, Apple devices to allow streaming on those devices. The company introduced a streaming-only plan as it expanded beyond the United States. Netflix made an announcement to split its streaming services and mail-based services in September 2011. The mail-based services was known as Qwikster. A month after the announcement, Netflix abandoned the split due to outcry from subscribers. By 2012 – 2014, Netflix expanded into Europe and rebranded its logo reinventing itself as a TV and movie studio.
Netflix Original Shows
Netflix began to develop their own production and shows in 2013 with the episodic drama series House of Cards marking the first of Netflix Originals. This was based on Netflix’s analysis of their customer’s data that provided a better understanding of their customers’ interests. As of 2016, Netflix had expanded to over 130 countries and offered streaming services in 21 different languages.
Evidently, Netflix success in the entertainment industry is unmatched. The Netflix model is constantly evolving to better serve its over 100 million customer base. Just recently, the company rolled out a new recommendation algorithm serving unique images to all its users that knows exactly which images will make them want to click play.
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