Netflix: How they Became One of the Largest Content Creators on Earth

James Campbell

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Netflix Logo

There are few streaming services better known at present than Netflix. The online giant has slowly become a more and more household name, and as of today have 60 million international subscribers and an additional 50 million domestically.

Netflix’s story begins far earlier than the streaming heights it has now reached, however. Coming from rather humble beginnings.

Netflix began its routes as a competitor to companies like Blockbuster, a DVD rental service. They offered a different service to blockbusters, as they delivered the DVDs right to your doorstep. Due to their ability to send the copies to their customers and not have to hold them down to a physical location such as Blockbuster did, they slowly became the substitute of choice.

The folktale behind the idea of Netflix coming when Reed Hastings, Netflix CEO,  returned a copy of Apollo 13  late, resulting in a $30 late charge. This leaving a bad taste in his mouth, as he began to ponder a better way for watching films without having to purchase them.

He then gave birth to the company we now know as Netflix, the company officially beginning in April 14th, 1998. At this stage, they only had 30 employees and a selection of 925 different titles.

At this time, the business model for Netflix was the same as other rental companies, they would charge a fee of $4 for a seven-day rental of a DVD along with a $2 rental fee. You could also buy the DVD if you desired to keep it, with the retail price being charged to credit card.

Along with the opportunity to rent the DVDs themselves, they also provided a rating system, much in the same vein as the one they use now. As well offering a recommendation system based on the past purchases of the customer, again similar to the current system.

netflix

In September 1999 the company adopted a subscription based business model, charging $15.95 a month. This allowed the customer to get as many DVDs a month, as long as they returned their current one before ordering the next. The rent-based model was then phased out.

The rental model was used for another nine years until it was eventually phased out for streaming. In 2007 Netflix had grown to 7.5 million subscribers with over 40,000 titles to choose from.

The ability to stream titles of your choice in the comfort of your own home led to rapid growth over the years to follow. Growing from 22.93 million in 2011 to 93.8 million by the end of 2016.

Netflix’s New Era: Content Creation

Although Netflix’s subscriber base continued to rise they began to face issues with content. As other content distributors began developing their own VOD services. Leading to them losing over 40% of their content between 2012 and 2016 . Leading them to consider a  rethinking of strategy.

The shift to creating its own original content began in 2013, with the critically acclaimed series House of Cards.  The political drama, starring Kevin Spacey, was acquired after Netflix outbid HBO by pledging $100 million dollars towards 26 episodes of the series.

This was a major statement of intent from the VOD provider that they would be taking the next step. Netflix continued to appeal to the binge-watch culture that they had part instigated, due to the availability of their content.

In the years that followed, they proved that House of Cards was no fluke, producing a large number of award-winning content. Shows such as Narcos, Making a Murder, and Stranger Things being some of their more popular ones. With their most recent show 13 reasons why gaining a massive online following, as well as critical acclaim.

Netflix shows no signs of letting up as they pledged to spend a further 6-billion dollars on acquiring and producing their own content.  With this, they will now become one of the largest content creators in the world.

Conclusion

Netflix has proved time and time again that they are an innovative and dynamic company which can stand the tests of time, especially in an ever-growing sector that has brought up many new rivals over their time

Their ability to accommodate the new ‘binge-watching’ culture of TV viewers has brought them leaps and bounds ahead of any competition.

All in all, they are a prime example of a great modern media company, they provide a great service, they provide content with every variety and all this at a reasonable rate. They are an example which any programmer should learn from and strive to replicate.

 

 

 

 

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James Campbell