Netflix is an American entertainment company headquartered in California. It operates a number of regional offices and production centers across North America, Europe, and Asia. The company provides streaming services for cinematic, dramatic, and documentary content via the internet, either by distributing and showcasing these works on its platform on behalf of their original producers or by producing exclusive content itself. Subscriptions to Netflix are available on a monthly or annual basis. Due to its extensive and high-quality content, Netflix’s subscriber count exceeded 220 million globally in the first quarter of 2022. This achievement placed Netflix as the second-largest media company by market value and the eighth most trusted brand worldwide. The platform is easily accessible through web browsers on personal computers or via a range of apps on smartphones. Netflix streams content in very high definition and also offers services like DVD and Blu-ray rentals delivered to subscribers through the United States Postal Service.
History of Netflix
DVD Rentals (1997–2006)
On August 29, 1997, Mark Randolph and Reed Hastings founded Netflix in Scotts Valley, California. Hastings, originally a computer scientist and mathematician, was a co-founder of Pure Software, which was sold in 1997 for $700 million. Randolph worked as the marketing director at Pure Software. The idea for Netflix emerged during the duo’s commutes between their homes in Santa Cruz. Impressed by Amazon, Randolph aimed to emulate its success by selling products online. Initially, they considered renting out video tapes but discarded the idea due to high storage costs and the fragility of the tapes during shipping. Upon learning about DVDs, which were introduced in the U.S. in March 1997, they decided to proceed with this new format. After successfully mailing a DVD to Hastings’ home, they decided to enter the DVD rental business. Hastings reportedly started Netflix after being fined $40 for a late return of “Apollo 13” at a video rental store. The company began with a $2.5 million investment, part of Hastings’ proceeds from the sale of Pure Software. Netflix.com was launched as the first site for DVD rental and sales, with a small team of 30 employees and a catalog of available DVDs. Later, Randolph and Hastings met with Jeff Bezos, founder of Amazon, who offered to buy Netflix for $14 to $16 million. Fearing competition from Amazon, Randolph initially found the offer fair, but Hastings, owning 70% of the company, rejected it.
Netflix’s business model allowed unlimited DVD rentals for a fixed subscription fee without due dates, late fees, or shipping charges. By 2000, despite incurring significant losses, the company offered to sell itself to Blockbuster for $50 million. However, Blockbuster’s CEO dismissed the offer as a joke. The company’s losses increased following the September 11 attacks, forcing Netflix to lay off a third of its 120 employees. Nonetheless, the company began to recover as demand for its services surged, going public in May 2002. It sold 5.5 million shares at $15 each, and by 2003, recorded its first profits of $6.5 million on $272 million in revenue. By 2004, profits soared to $49 million on over $500 million in revenue, with Netflix shipping a million DVDs daily.
As a result of these successes, Blockbuster attempted to mimic Netflix but failed to keep up, leading to legal disputes that eventually ended in a settlement.
Transition to Streaming Services (2007–2012)
In January 2007, Netflix launched its online streaming service, initially offering only 1,000 films compared to the 70,000 films available on DVDs. The company delayed expanding its online film offerings, but by the mid-2000s, improved data transfer speeds allowed customers to stream movies. The original concept of a “Netflix box” for overnight film downloads was abandoned in favor of streaming, inspired by the popularity of YouTube’s streaming services.
In February 2007, Netflix delivered its billionth DVD to a customer in Texas. By April of the same year, Netflix appointed Anthony Wood to develop the “Netflix Player,” enabling direct content streaming to televisions. In January 2008, all DVD rental subscribers received unlimited streaming service at no additional cost. However, in August 2008, a database failure disrupted DVD shipping for three days, prompting the company to transfer its data to Amazon’s service. Netflix then shifted its focus to Blu-ray rentals and ceased DVD rentals.
In 2010, Netflix signed agreements with several major studios to stream their films on its platform and secured streaming rights for “Breaking Bad” after its third season. This move led to the production of a fourth season and increased viewership on Netflix, making “Breaking Bad” a significant success for the platform.
By May 2011, Netflix’s streaming service became the largest source of internet traffic in North America, representing 30% of peak traffic. In September of the same year, Netflix expanded to 43 Latin American countries and announced plans to separate its DVD rental service into a standalone company called “Qwikster,” but this plan was quickly reversed. In January 2012, Netflix began its expansion into Europe, starting with the UK and Ireland and later extending to Scandinavian countries. The company also signed a deal with Walt Disney to stream both new and old releases, a partnership that ended after Disney launched its own platform, Disney+.
Original Programming Development (2013–2017)
In February 2013, Netflix announced its own awards ceremony, “The Flexys.” In March, it added a Facebook sharing feature, allowing U.S. subscribers to see what their friends were watching and their favorites. By August, Netflix introduced the ability to have up to five user profiles on one account.
In June 2014, Netflix revealed a global rebranding with a new logo and website interface. The change was met with mixed reactions. In April 2015, Netflix added audio descriptions for the visually impaired and expanded to Australia, New Zealand, and Japan, becoming the first Asian country to receive the service. Later that year, Netflix announced a prototype device called “The Switch,” which allowed users to control their smart home devices. Although the device did not receive a patent, Netflix shared its construction details online. In November 2016, Netflix introduced offline playback, allowing users to temporarily store content on their devices for offline viewing. The same year saw the release of approximately 126 original series or films.
By July 2017, Netflix’s original content represented over a third of peak internet traffic in North America. In September, Netflix announced it would offer low-bandwidth mobile technology to airlines, enabling passengers to stream movies during flights.
Global Production Expansion (2017–Present)
In January 2019, Netflix sought membership in the Motion Picture Association of America (MPAA) and became the first streaming service to join. In November 2019, Netflix signed a long-term lease for the Paris Theatre, the last single-screen cinema in Manhattan, overseeing its renovation. In September 2020, Netflix signed a multimillion-dollar deal with the Duke and Duchess of Sussex to produce TV shows, films, and children’s content as part of their commitment to step back from royal duties.
In March 2021, Netflix received the highest number of Oscar nominations compared to any other studio, winning seven awards and receiving 36 nominations. Later that year, Netflix won more Emmys than any other network, with 44 awards. The company also announced plans to open its first office in Canada, in Toronto, and additional offices in Sweden, Rome, and Istanbul to expand its original content in those regions. In July, Netflix planned to add video games to its service by 2022, offering mobile games included in subscription plans. The company launched trial versions, including mobile games based on “Stranger Things,” free to subscribers through the Netflix app. As of August, Netflix’s original content represented 40% of its U.S. library. In September, the Korean series “Squid Game,” produced by Netflix, became the most-watched show within a week of its release in multiple markets, including Korea, the U.S., and the UK, attracting over 111 million viewers within the first 28 days.
In March 2022, Netflix announced it would open an office in Poland to serve as a hub for original production in Central and Eastern Europe. In response to the Russian invasion of Ukraine, Netflix decided to suspend all activities in Russia. By the end of the first quarter of 2022, Netflix reported a decline in subscribers, attributing this to various factors, including eased COVID-19 restrictions and password sharing among 100 million households globally, with Canada and the U.S. accounting for 30 million of those.
Devices for Watching Netflix
Netflix can be accessed through web browsers on personal computers or via apps on smartphones, including Blu-ray players, tablets, smart TVs, and digital media players. An increasing number of multi-channel TV providers, including cable TV and IPTV services, have also integrated Netflix apps into their set-top boxes.
Content
Original Content
Netflix offers a service called Netflix Originals, consisting of content produced entirely in-house, jointly, or exclusively distributed on its platform. Netflix funds original shows differently from traditional TV networks by providing upfront financing and often ordering two seasons of most series.
Over the years, Netflix’s production has reached an unparalleled level compared to other TV networks and streaming services. According to Variety, Netflix produced 240 original series and films in 2018, rising to 371 in 2019—more than the total number of original series produced by the U.S. TV industry in 2005. The company’s annual production budget increased to $13.6 billion in 2021 and is expected to reach $18.9 billion by 2025, surpassing all its competitors.
Film and TV Deals
Netflix has television deals with several studios, granting it exclusive streaming rights with companies like Warner Bros., Universal, Sony, Fox Century, and
Paramount Pictures. It also operates deals with individual film studios and various major media companies worldwide.
Sponsorships and Partnerships
Netflix has pursued global partnerships to expand its original content offerings. In the United Kingdom, for instance, the company partnered with multiple production studios to create content catered to British audiences. Additionally, Netflix signed partnerships with local film studios in other countries, such as India and Japan, to develop exclusive content for those regions.
Subscriber Impact
Netflix’s global reach and original content have significantly impacted the entertainment industry. Its success in creating hit shows and films has influenced competitors to invest more in original programming and adopt similar distribution models. The platform’s data-driven approach to content creation and viewer preferences has also shaped how media companies produce and distribute their content.
