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Netflix, Inc. is a media company based in Los Gatos, California, founded in 1997 by American entrepreneurs Reed Hastings and Marc Randolph. The company has been pushing the envelope as a content deliverer since its inception. Netflix first disrupted the Blockbuster video-rental model; it then took on video streaming and cable companies, then content creators, and, as of 2023, broadcasters.
Netflix was launched in 1997 as a DVD rental service that charged a per-rental fee. With tens of thousands of titles available, subscribers could select movies and TV shows through the website and receive the discs by mail. In 1999, Netflix offered an online subscription service; by the year 2000, this included flat-fee unlimited rentals with no due dates, late fees, or shipping fees.
In 2007, Netflix heralded a new era with the introduction of streaming services that allowed subscribers to access content directly over the Internet. Streaming delivery quickly gained momentum, becoming unlimited for most subscription plans. Netflix partnered with makers of video game consoles, Blu-ray Disc players, and other electronics to enable video streaming on those devices.
By 2010, Netflix introduced a streaming-only plan. The company initiated its global expansion to Canada, Latin America, the Caribbean, and Europe by 2012, reaching over 190 countries and territories by 2016.
In 2022, Netflix announced plans to begin cracking down on password sharing, noting that over 100 million households had shared their account passwords with others. The crackdown was credited with boosting subscriber rates, with Netflix reporting it had added 8.8 million subscribers worldwide in the third quarter of 2023. The company also said it would raise prices on its streaming services.
In 2023, Netflix began live streaming with its stand-up special Chris Rock: Selective Outrage. In January 2024, Netflix said it had inked a 10-year deal with World Wrestling Entertainment (WWE) to stream a weekly live professional wrestling program, Monday Night Raw, beginning in 2025. In March 2024, the company announced it would live stream a fight between boxers Mike Tyson and Jake Paul in July.
Blockbuster said online subscribers will also get two free in-store movie rental coupons every month. The promotion is a step toward integration of its online and in-store offerings sometime next year. Such integration would allow subscribers to freely roam between online and store services, the company said.
Netflix, which last year won a patent for its online DVD rental service, currently dominates the field, with more than 1 million subscribers. But the company is feeling the heat as more competitors enter the market. In June, retail giant Wal-Mart introduced its own online movie rental service that's also priced a notch lower than Netflix's.
"The online monthly fee is currently priced below our biggest competitor for the three-out rental plan. Plus, we are offering 25,000 new release and catalog titles," Shane Evangelist, a Blockbuster vice president, said in a statement. "We believe that all of this, combined with our marketing savvy, should help Blockbuster to develop a substantial share of the online rental business by the end of next year."
Netflix is an American subscription video on-demand over-the-top streaming service. The service primarily distributes original and acquired films and television shows from various genres, and it is available internationally in multiple languages.[6]
Launched on January 16, 2007, nearly a decade after Netflix, Inc. began its pioneering DVD-by-mail movie rental service, Netflix is the most-subscribed video on demand streaming media services, with over 277.7 million paid memberships in more than 190 countries as of July 2024.[5][7] By 2022, "Netflix Original" productions accounted for half of its library in the United States and the namesake company had ventured into other categories, such as video game publishing of mobile games through its flagship service. As of October 2023, Netflix is the 23rd most-visited website in the world, with 23.66% of its traffic coming from the United States, followed by the United Kingdom at 5.84% and Brazil at 5.64%.[8][9]
Initially, Netflix offered a per-rental model for each DVD but introduced a monthly subscription concept in September 1999.[20] The per-rental model was dropped by early 2000, allowing the company to focus on the business model of flat-fee unlimited rentals without due dates, late fees, shipping and handling fees, or per-title rental fees.[21] In September 2000, during the dot-com bubble, while Netflix was suffering losses, Hastings and Randolph offered to sell the company to Blockbuster for $50 million. John Antioco, CEO of Blockbuster, thought the offer was a joke and declined, saying, "The dot-com hysteria is completely overblown."[22][23] While Netflix experienced fast growth in early 2001, the continued effects of the dot-com bubble collapse and the September 11 attacks caused the company to hold off plans for its initial public offering (IPO) and to lay off one-third of its 120 employees.[24]
DVD players were a popular gift for holiday sales in late 2001, and demand for DVD subscription services were "growing like crazy", according to chief talent officer Patty McCord.[25] The company went public on May 23, 2002, selling 5.5 million shares of common stock at US$15.00 per share.[26] In 2003, Netflix was issued a patent by the U.S. Patent & Trademark Office to cover its subscription rental service and several extensions.[27] Netflix posted its first profit in 2003, earning $6.5 million on revenues of $272 million; by 2004, profit had increased to $49 million on over $500 million in revenues.[28] In 2005, 35,000 different films were available, and Netflix shipped 1 million DVDs out every day.[29]
In 2004, Blockbuster introduced a DVD rental service, which not only allowed users to check out titles through online sites but allowed for them to return them at brick and-mortar stores.[30] By 2006, Blockbuster's service reached two million users, and while trailing Netflix's subscriber count, was drawing business away from Netflix. Netflix lowered fees in 2007.[28] While it was an urban legend that Netflix ultimately "killed" Blockbuster in the DVD rental market, Blockbuster's debt load and internal disagreements hurt the company.[30]
On April 4, 2006, Netflix filed a patent infringement lawsuit in which it demanded a jury trial in the United States District Court for the Northern District of California, alleging that Blockbuster's online DVD rental subscription program violated two patents held by Netflix. The first cause of action alleged Blockbuster's infringement of copying the "dynamic queue" of DVDs available for each customer, Netflix's method of using the ranked preferences in the queue to send DVDs to subscribers, and Netflix's method permitting the queue to be updated and reordered.[31] The second cause of action alleged infringement of the subscription rental service as well as Netflix's methods of communication and delivery.[32] The companies settled their dispute on June 25, 2007; terms were not disclosed.[33][34][35][36]
On October 1, 2006, Netflix announced the Netflix Prize, $1,000,000 to the first developer of a video-recommendation algorithm that could beat its existing algorithm Cinematch, at predicting customer ratings by more than 10%. On September 21, 2009, it awarded the $1,000,000 prize to team "BellKor's Pragmatic Chaos".[37] Cinematch, launched in 2000, was a system that recommended movies to its users, many of which might have been entirely new to the user.[38][39]
Through its division Red Envelope Entertainment, Netflix licensed and distributed independent films such as Born into Brothels and Sherrybaby. In late 2006, Red Envelope Entertainment also expanded into producing original content with filmmakers such as John Waters.[40] Netflix closed Red Envelope Entertainment in 2008.[41][42]
In January 2007, the company launched a streaming media service, introducing video on demand via the Internet. However, at that time it only had 1,000 films available for streaming, compared to 70,000 available on DVD.[43] The company had for some time considered offering movies online, but it was only in the mid-2000s that data speeds and bandwidth costs had improved sufficiently to allow customers to download movies from the net. The original idea was a "Netflix box" that could download movies overnight, and be ready to watch the next day. By 2005, Netflix had acquired movie rights and designed the box and service. But after witnessing how popular streaming services such as YouTube were despite the lack of high-definition content, the concept of using a hardware device was scrapped and replaced with a streaming concept.[44]
In February 2007, Netflix delivered its billionth DVD, a copy of Babel to a customer in Texas.[45][46] In April 2007, Netflix recruited ReplayTV founder Anthony Wood, to build a "Netflix Player" that would allow streaming content to be played directly on a television rather than a desktop or laptop.[47] Hastings eventually shut down the project to help encourage other hardware manufacturers to include built-in Netflix support, which would be spun off as the digital media player product Roku.[48][49][50]
In January 2008, all rental-disc subscribers became entitled to unlimited streaming at no additional cost. This change came in a response to the introduction of Hulu and to Apple's new video-rental services.[51][52][page needed] In August 2008, the Netflix database was corrupted and the company was not able to ship DVDs to customers for 3 days, leading the company to move all its data to the Amazon Web Services cloud.[53] In November 2008, Netflix began offering subscribers rentals on Blu-ray and discontinued its sale of used DVDs.[54] In 2009, Netflix streams overtook DVD shipments.[55]
On January 6, 2010, Netflix agreed with Warner Bros. to delay new release rentals to 28 days after the DVDs became available for sale, in an attempt to help studios sell physical copies, and similar deals involving Universal Pictures and 20th Century Fox were reached on April 9.[56][57][58] In July 2010, Netflix signed a deal to stream movies of Relativity Media.[59] In August 2010, Netflix reached a five-year deal worth nearly $1 billion to stream films from Paramount, Lionsgate and Metro-Goldwyn-Mayer. The deal increased Netflix's annual spending fees, adding roughly $200 million per year. It spent $117 million in the first six months of 2010 on streaming, up from $31 million in 2009.[60] On September 22, 2010, Netflix launched in Canada, its first international market.[61][62] In November 2010, Netflix began offering a standalone streaming service separate from DVD rentals.[63]
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