Netflix Company History
Introduction
Netflix
is among the leading fortune 500 companies. Standing at number 379, the company
has made its make in the movie industry and if numbers are anything to go by,
the company is here to stay. The company specializes in entertainment and it is
the first company to offer streaming media and video on demand on a global
scale. The growth of the company has been consistent and substantial as it
further integrated television and film production and only distribution. This
article provide a history of Netflix since its conception.
Company History
Netflix
Inc. is a global leader in internet television network. Founded in Scotts
Valley, California in 1997 by Reed Hasting and Marc Randolph, the company has
grown to acquire more than 83 million members who are located in over 190
countries worldwide. Initially the company offered discs on a rental basis
where subscribers pay a $19.95 on unlimited rentals. The conditions are that
they may not have more than 2 disks at a time. The company has more than 20
regional shipping centers in the United States in an effort of speeding
delivery. Once customer’s place their order on the company’s website, the discs
are availed to them in a day or two maximum.
Founders
Reed
Hastings and Marc Randolph were technology enthusiasts with prior experience of
setting up successful websites. The idea of developing a website where people
would rent and buy DVDs at the comfort of their home is would led to the
development of Netflix. Randolph had helped in the development of a mail order
company while Hastings had founded pure software. To roll out the business,
Hastings invested $2.5 million. The company was to take advantage of the small
size and weight of the discs which made shipping to customers easy and cheap.
The operations of the company started in April 1998 with 925 titles available
for renting and 30 employees.
Promotional boost
In
September of 1998, the tables turned in the favor of the company after making
10,000 copies of a DVD where Bill Clinton Grand Jury testimony was covered. The
discs were sold for a mere two cents with an additional $2 for shipping costs.
As of December the same year, the company relinquished selling DVDs to amazon
in exchange for promotion on the website. During this time only one percent of
U.S households owned DVD players as they were high end and cutting technology
of the time. By January 1999, the company partnered with All-Movie Guide an
online movie information provide that directed traffic to Netflix website. A
dedicated column was dedicated by Leonard Maltin to promote the must rent
movies from Netflix. In July of the same year, Netflix secured a $30 million
investment from Arnault group that enhanced its marketing and brand building
endeavors.
Subscription plan
The
marquee program was introduced in September of 1999 where members were given
the opportunity to pre-select four DVDs without having to worry about due dates
and late fees for just $15.95. The program was a possibility since the company
had attained economies of scale but despite this, it reported a loss of $29.8
million due to heavy spending in an effort of enticing customers and gained
over 250, 000 customers
Public offering
The
first initial offering by the company was made in 2000 with an initial common
stock worth $86.25 million but later withdrawn as investors became skeptical of
the e-commerce model and Netflix’s lack of profit. In 2002, the company hit a
target of 500, 000 subscribers and rolled out an IPO raising $82.5 million and
was able to pay outstanding debts and promote more. The company hit a million
subscribers in 2003 and by 2005, the company was distributing more than one
million DVDs by mail daily with over 35,000 titles to choose.
Conclusion
Today,
Netflix offers a platform where members can watch as much as they want, anywhere
and anytime provided they have an internet connection. One can play, pause and
resume watching without any commercials appearing and no commitments.
EmoticonEmoticon