How Netflix Changed the World
Netflix is one of the most influential creations of the past decade. Today more than ever, families and individuals spend countless hours binge watching the latest popular show. Despite the success we see today, Netflix did not see immediate results. Several years of trial and error were used to reach this level of excellence, during which the entire method of distribution of content was changed to better align with new age technology. As a result of the now quick and easy video streaming service created by Netflix, a transformation in the way we consume entertainment has taken place.
Two individuals alone are responsible for the creation of Netflix. In 1997, Netflix was created by entrepreneurs Reed Hastings and Marc Randolph. To start, the idea behind the creation of Netflix was based off of the model of Amazon. Hastings and Randolph had the idea of building a company capable of distributing a product all across the world while using a subscription based approach to the monetary aspects. It wasn’t until the following year that they built Netflix.com, a site where people were able to choose DVD’s that they could rent to any number per month, so long as they paid the subscription fee. The model of Amazon was particularly attractive to the two entrepreneurs as they wanted to sell a product that everyone and anyone was able to enjoy regardless of age or location in the United States.
While this idea was unique and new at the time, it took a couple years to really catch on. Over the first years of the product, issues surrounding time it took for DVD to get from the warehouse to customers home as well as quality of the DVD upon arrival were among the controversial disadvantages that Netflix users experienced. Despite these tradeoffs, Netflix began to gain a following, with people all over the United States beginning to subscribe and gain access to a series of films and shows. In 2007, Netflix launched an entirely new way to experience the product, utilizing the fast growing web to build a site where people could stream the movies and shows directly. As mentioned previously, the main roadblocks Hastings and Randolph experienced involved issues of distribution. With this change, they simply were following the model of progression that the company was already on. It was logical. Time and speed of availability was always the variable of concern, and now this concern was seemingly addressed. Now instead of needing to manually move products into boxes before shipping across the country, Netflix would move users into groupings based on servers before they were provided the content which was desired. Timing of availability was transformed from days to seconds.
The revolutionary switch to offering streaming services was not an overnight success. This change was one previously unheard or thought of, and it took years of tinkering before it became a commonplace in the American household. Issues that arose along with the invention of this idea included limited bandwidth in homes, meaning streaming constantly was buffering and ruining the viewers experience, as well as limited access to television series. In order to address one of these issues, Netflix made deals with networks such as Starz, in order to give their subscribers access to thousands of shows and movies.
While making deals with other networks was certainly profitable, Netflix wanted more. They decided to take matters into their own hands, and began to create their own TV show. This show turned out to be House of Cards, released in 2013, an especially popular show due to a star studded cast. In addition, Netflix’s ingenuity of releasing all episodes at one given time allowed viewers to begin “binge watching.” Previously unheard of, consumers were freed from the annoyance of sitting through advertisements every 10 minutes, and did not need to wait for each episode to be released on a timely basis each and every week. Instead, they were free to watch for as long and as many episodes as they pleased, and able to stop and restart at their leisure. With adaptations that pleased the viewers and made their experience significantly easier, it is no wonder that the stock in Netflix soared over the next years.
Netflix has certainly risen to be one of the most popular and wealthy companies of our generation, but it was not built without its share of missteps and controversy. To start, following the addition of the online streaming website, Netflix rolled out a separate website to utilize the inventory which they had already built up of thousands of DVDs. This site worked effectively the same as how the old Netflix worked, but with a different name, as well as an additional cost as it was deemed a “separate” product. This was met with serious backlash from customers, even going so far as to cause close to 800,000 subscribers to cancel their subscription (How Netflix Became a $100 Billion Company in 20 Years). A second controversy that arose was following the release of their first self produced show, as mentioned earlier, House of Cards. As mentioned, this show experienced popularity, and as a result, Netflix produced another product, this time a movie titled, Beasts of No Nation. Netflix not only wanted to allow its subscribers to watch, but also approached many movie theaters asking if they would be able to showcase their movie. In general, the movie theater companies were extremely opposed to working with Netflix, as their new brand and method of attracting consumers was taking away from the previous monopoly on the movie consuming market. By creating an outlet where people could easily and more affordably watch new movies, Netflix was essentially pitted against the major corporations. While the movie flopped in theaters, Netflix was successful in terms of the streaming numbers they saw. As a result, they felt that the success was worth the time and money it took to produce the final product, which led to many more self produced shows being released in the years to follow.
A final aspect that helps to explain how and why Netflix was able to grow into a billion dollar company is the concept of individualization. Netflix was one of the first companies to directly try and reach consumers’ needs, as opposed to letting them figure out what they want on their own. To do this, Netflix created algorithms that were capable of recognizing shows and movies that the user has watched already, before analyzing and recommending more that they might be interested in. Through this system, they are able to keep subscribers engaged and interested to see the latest new release. Another aspect that contributed to the success is consistent quick releases. After the success of House of Cards, Netflix recognized the untapped potential of self produced programs. By producing in house, Netflix is able to not only mitigate costs required to acquire new movies, but also control the speed at which they get new content and ideas. In order to improve speed, software is used at every point in the production, and it is not necessary to go back and forth from one team of production to the next as all is in house and everyone is under the same roof. While many of the films produced by Netflix are not necessarily of the highest quality, the sheer number of films and shows that have been produced in the past years allow for a wide variety of themes and ideas potentially grabbing people of all different audiences.
Obviously, Netflix has been innovative and creative in their building of an empire. But what have been the effects? And what specifically have they changed in the world? To begin, the obvious answer is video streaming. Everywhere we look, people are streaming content on online platforms such as Netflix, with other major companies attempting to copy the model such as Hulu, Amazon Prime, and Apple TV. Furthermore, the concept of creating your own content has been copied over and over by these same video streaming services, each having produced several of their own shows and movies uniquely only available on the online platform and not in movies. Another influential aspect of Netflix is the concept of releasing entire series at one single moment. Instead of waiting patiently to watch your favorite shows once a week, people are able to focus on one single show, and watch multiple episodes each day of the week. This encourages and convinces viewers to consume more than was ever possible beforehand, and is a concept which all other streaming entertainment companies have followed.
In conclusion, Netflix has been a unique and innovative product. It has changed the way in which we not only view TV, but also the method by which it is displayed and consumed. Now more than ever, people are opting for only purchasing video streaming services, and some do not even own televisions as these services are offered on computers and any mobile devices. It was extremely interesting to look into a product that set the standard for the future, and I look forward to looking into how Netflix continues to innovate and change the way in which it creates and distributes content.
Works cited
“About Netflix.” Netflix Media Center, media.netflix.com/en/about-netflix.
Butler, Dave. “History of Netflix: Timeline and Facts.” TheStreet, 16 Sept. 2019, www.thestreet.com/technology/history-of-netflix-15091518.
McFadden, Christopher. “The Fascinating History of Netflix.” Interesting Engineering, Interesting Engineering, 10 Apr. 2020, interestingengineering.com/the-fascinating-history-of-netflix#:~:text=Netflix%20was%20first%20founded%20in,website%2Dbased%20movie%20rental%20service.
“How Netflix Became a $100 Billion Company in 20 Years.” Product Habits, 30 Apr. 2018, producthabits.com/how-netflix-became-a-100-billion-company-in-20-years/.
