The Fascinating History of Netflix

Netflix is a giant of the internet today, but how did it start and who founded it?

Netflix is the de facto place to go for movie and TV series streaming on the planet. According to sites like fortune.com, its services alone constitute about 15% of all the world's internet bandwidth!

Not bad for a company that originally posted DVDs by snail mail. Here we explore the origins of the company and track some of its important milestones in history. 

RELATED: HOW EXACTLY DOES NETFLIX RECOMMEND MOVIES TO YOU?

Who started Netflix?

Netflix was first founded in August of 1997 by two serial entrepreneurs Marc Randolph and Reed Hastings. The company started out in Scotts Valley, California and has grown to become the world's leading internet entertainment platform.

When it first opened, Netflix was purely a website-based movie rental service. It allowed people to rent DVDs online.

Users would put in their orders and receive a DVD in the post. When they'd finished with them, they simply posted them back to Netflix

Today it has over 151 million paid subscribers in over 190 countries around the world. It offers a wide range of TV series, documentaries, and feature films across a wide variety of genres and languages.

Reed Hastings

history of netflix reed hastings
Source: Guety/Wikimedia Commons

"Reed Hastings co-founded Netflix in 1997. In 1991, Reed founded Pure Software, which made tools for software developers. After a 1995 IPO, and several acquisitions, Pure was acquired by Rational Software in 1997.

Reed is an active educational philanthropist and served on the California State Board of Education from 2000 to 2004. He is currently on the board of several educational organizations including KIPP and Pahara. Reed is also a board member of The City Fund.

Reed received a BA from Bowdoin College in 1983, and an MSCS in Artificial Intelligence from Stanford University in 1988. Between Bowdoin and Stanford, Reed served in the Peace Corps as a high school math teacher in Swaziland. Reed is married with two children." - Netflix.com.

Marc Randolph

history of netflix marc randolph
Source: marcrandolph.com

Marc Randolph is a "veteran Silicon Valley entrepreneur, advisor, and investor. As co-founder and founding CEO of Netflix, he laid much of the groundwork for a service that’s grown to 150 million subscribers and fundamentally altered how the world experiences media.

He also served on the Netflix board of directors until retiring from the company in 2003." - marcrandolph.com

He graduated with a degree in Geology and would go on to found and run various mail-order and direct-to-customer companies. 

Throughout Marc's career, he founded no less than six successful startups, including the magazine Macworld, and has mentored hundreds of early-stage entrepreneurs. 

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When and where was Netflix founded?

As previously mentioned, Netflix was founded in 1997 in Scotts Valley, California. It was originally a rent-by-mail DVD service that used a pay-per-rental model.

Users would browse and order the films they wanted on their website, put in an order, an Netflix would post them to your door. After renters had finished with the DVDs, they would simply post them back.

Rentals were around $4 plus a $2 postage charge. After significant growth, Netflix would switch to a subscriber-based model. 

With this model, users could keep the DVDs for as long as they liked but could only rent a new movie after returning their existing one. 

They would eventually introduce a streaming model in 2010 that we all know today. 

Netflix's model would directly challenge the market dominance of rental giants like Blockbuster at the time. As we know today, Blockbuster could not compete and filed for bankruptcy in 2010.  

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But this never needed to happen. Years before, Blockbuster could have actually partnered or even bought Netflix out.

"In 2000, Netflix CEO and co-founder Reed Hastings approached Blockbuster about a partnership. Unfortunately for Blockbuster, their CEO just smiled and laughed at him.

In fact, Blockbuster even had a chance to purchase Netflix for $50 million. Netflix currently has a Market Cap of [116.42B] (2019) and a share price of  $331.89, while Blockbuster is out of business." - rewindandcapture.com. 

Why is Netflix called Netflix?

You may, or may not, have been able to work this out for yourself. But in case you are still stumped, the name Netflix is a combination of "Net" (common parlance abbreviation of the internet" and "Flix" (a common abbreviation of "flicks" which n turn is slang for a movie or film). 

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Pretty straight forward really. 

How was Netflix founded?

At the time Netflix was founded, Marc was working as a marketing director for Hasting's company Pure Atria. He was also the co-founder of MicroWarhouse (a computer mail-order company).

Hasting would later sell Pure Atria to the Rational Software Corporation in 1997 for $700 million

By all accounts, the pair came up with the idea for Netflix during a commute between their homes in Santa Cruz and Pure Atria's HQ in Sunnyvale prior to Pure Atria's acquisition and merger. 

Reed would supply the seed capital and invested $2.5 million into the startup in cash. Inspired by Amazon's e-commerce model, the pair explored various portable items they could use to sell over the internet in a similar fashion.

After initially considering and rejecting VHS cassettes, they settled on DVDs as the perfect product. After testing their idea by posting one to their homes in Santa Cruz, and it arriving in perfect condition, they decided the time was right to break into the market with their new revolutionary model.

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Netflix launched in April of 1998 and became the world's first online DVD rental and merchant. They had only a few tens of staff and just under 1000 titles at the time. 

The rest, as they say, is history.

Some of the key milestones in Netflix's history

Here is a brief timeline of some of the critical milestones in the company's history (courtesy of everydayelectronic.com): -

1997 – Reed Hastings and software executive Marc Randolph co-found Netflix to offer online movie rentals.

1998 – Netflix launches the first DVD rental and sales site, Netflix.com.

1999 – Netflix debuts a subscription service, offering unlimited DVD rentals for one low monthly price.

2000 – Netflix introduces a personalized movie recommendation system, which uses Netflix members’ ratings to accurately predict choices for all Netflix members.

2002 – Netflix makes its first public offering (IPO on Nasdaq under the ticker “NFLX” with 600,000 members in the US.)

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history of netflix logo
Source: Matthew Keys/Flickr

2005 – The number of Netflix members rises to 4.2 million.

2007 – Netflix introduces streaming, which allows members to instantly watch television shows and movies on their personal computers.

2008 – Netflix partners with consumer electronics companies to stream on the Xbox 360, Blu-ray disc players and TV set-top boxes.

2009 – Netflix partners with consumer electronics companies to stream on the PS3, Internet-connected TVs, and other Internet-connected devices.

2010 – Netflix is available on the Apple iPad, iPhone and iPod Touch, the Nintendo Wii, and other Internet-connected devices. Netflix launches its service in Canada.

2011 – Netflix launches throughout Latin America and the Caribbean.

2012 – Netflix became available in Europe including the United Kingdom, Ireland and in the Nordic Countries. Netflix wins its first Primetime Emmy Engineering Award.

history of netflix mobile
Source: Stock Catalog/Flickr

2013 – Netflix received 31 primetime Emmy nominations including outstanding drama series, comedy series and documentary or nonfiction special for “House of Cards”, “Orange is the new black”, and “The Square” respectively. House of Cards won three Primetime Emmy Awards. Netflix was the first internet TV network nominated for the Primetime Emmy.

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2014 – In 2014 Netflix launched into 6 new countries in Europe (Austria, Belgium, France, Germany, Luxembourg, and Switzerland). Netflix wins 7 creative Emmy Awards for "House of Cards" and "Orange Is the New Black". Netflix now has over 50 million members globally.

2015 – Netflix launches in Australia, New Zealand and Japan, with continued expansion across Europe in Italy, Spain and Portugal. The first Netflix original feature film “Beasts of No Nation” is released.

2016 onwards – Netflix is available worldwide.

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