At the start of the decade, Netflix was mailing DVDs straight to people’s homes. Subscribers paid $9 per month for access to a massive library of titles without having to leave the comforts of their homes (RIP Blockbuster). Back then, Netflix was worth a few billion dollars.
Today, Netflix is an entertainment powerhouse, content developer, and near-mandatory streaming platform for anyone who wants to see some of the best television of the modern era. Those who invested $1 million in 2010 would have over $40 million today.
Netflix’s success is surprising, especially given some of the company’s long-standing financial metrics. With thin margins, negative cash flows, and rich competitors, it seemed like only a matter of time before Netflix met its end.
Sitting on the edge of the 2020s, we couldn’t be more wrong.
A Brief History of Netflix
Netflix was founded in 1997 by serial entrepreneurs, Marc Randolph and Reed Hastings. Throughout his career, Randolph started six successful companies and mentored hundreds of entrepreneurs. Hastings founded Pure Software in 1991 and sold it to Rational Software in 1997.
With their experience and educational backgrounds, the founding duo built Netflix as a rent-by-mail DVD service. Customers paid a $4 per-rental plus a $2 postage fee. In 1999, the user base grew enough to justify switching over to a subscription model.
In 2007, Netflix debuted its revolutionary streaming service. After that, it was all about growth. The company partnered with game developers, expanded internationally, and signed deals to get its streaming app on the biggest devices in the market. Currently, Netflix has more than 150 million subscribers in 190 countries.
The Competition is Catching Up
Netflix paved the way for streaming and changed the entertainment industry forever. Companies like Amazon, Apple, and Disney have all launched their own streaming services, forcing Netflix to invest huge sums into original content development. In 2019 alone, Netflix projected it would spend $15 billion in this area.
With studios and streaming platforms forming alliances, consumers now have to sign up for multiple services to catch their favorite shows and movies. NBCUniversal announced it is pulling The Office for its streaming service, and Friends is transitioning over to HBO Max. Consequently, Netflix is trying to plug a growing content gap with original titles.
Netflix hopes to replicate the critical and commercial success of movies like Scorsese’s “The Irishman,” a gangster movie that features a “de-aged” Robert De Niro. Shows like “Stranger Things” and “The Crown” also carry a lot of viewership and entice subscribers to stay on board.
Technology Keeping Netflix Afloat
Although many worry about Netflix’s survival in the upcoming streaming wars, some are optimistic the company will survive. Netflix has invested significant time and money into optimizing the user experience. The platform’s interface is easy to use, and people can search through personalized feeds to find the content they want.
Netflix has also pioneered innovation on several fronts, including video compression, cross-device syncing, and offline downloads. Every step of the way, Netflix has made it easier for subscribers to watch high-quality content from anywhere. Even small features, like giving viewers the chance to skip intros and credits, increase the ease of the overarching Netflix experience.
The future may not be Netflix’s for the taking, but the platform does have a history of differentiating itself when it needed to most. Don’t be surprised if Netflix changes the game again.