Who started Netflix?

Netflix^[1]
is the de facto place to go for movie and TV series
streaming on the planet. According to sites like fortune.com^[2], its services alone
constitute about 15% of all the world’s internet
bandwidth!

Not bad for a company that originally posted DVDs by snail mail.
Here we explore the origins of the company and track some of its
important milestones in history. 

RELATED: HOW EXACTLY DOES NETFLIX RECOMMEND
MOVIES TO YOU?^[3]

Who started Netflix?

Netflix^[4] was first founded in
August of 1997 by two serial entrepreneurs Marc Randolph and Reed
Hastings. The company started out in Scotts Valley, California and
has grown to become the world’s leading internet entertainment
platform.

When it first opened, Netflix^[5]
was purely a website-based movie rental service. It allowed people
to rent DVDs online.

Users would put in their orders and receive a DVD in the
post. When they’d finished with them, they simply posted them back
to Netflix^[6]. 

Today it has over 151 million paid
subscribers in over 190 countries around the
world. It offers a wide range of TV series, documentaries, and
feature films across a wide variety of genres and
languages.

Reed Hastings

Source: Guety/Wikimedia Commons^[7]

“Reed Hastings co-founded Netflix in 1997. In 1991, Reed
founded Pure Software, which made tools for software developers.
After a 1995 IPO, and several acquisitions, Pure was acquired by
Rational Software in 1997.

Reed is an active educational philanthropist and served on
the California State Board of Education from 2000 to 2004. He is
currently on the board of several educational organizations
including KIPP and Pahara. Reed is also a board member of The City
Fund.

Reed received a BA from Bowdoin College in 1983, and an
MSCS in Artificial Intelligence from Stanford University in 1988.
Between Bowdoin and Stanford, Reed served in the Peace Corps as a
high school math teacher in Swaziland. Reed is married with two
children.” – Netflix.com.^[8]

Marc Randolph

Source: marcrandolph.com^[9]

Marc Randolph is a “veteran Silicon Valley
entrepreneur, advisor, and investor. As co-founder and founding CEO
of Netflix, he laid much of the groundwork for a service that’s
grown to 150 million subscribers and fundamentally altered how the
world experiences media.

He also served on the Netflix board of directors until retiring
from the company in 2003.” – marcrandolph.com^[10]. 

He graduated with a degree in Geology and would go on to found
and run various mail-order and direct-to-customer
companies. 

Throughout Marc’s career, he founded no less than six successful
startups, including the magazine Macworld, and has mentored
hundreds of early-stage entrepreneurs. 

When and where was Netflix founded?

As previously mentioned, Netflix^[11] was founded in 1997 in
Scotts Valley, California. It was originally a rent-by-mail DVD
service that used a pay-per-rental model.

Users would browse and order the films they wanted on
their website, put in an order, an Netflix would post them to your
door. After renters had finished with the DVDs, they would simply
post them back.

Rentals were around $4 plus a
$2 postage charge. After significant growth,
Netflix would switch to a subscriber-based model. 

With this model, users could keep the DVDs for as long as they
liked but could only rent a new movie after returning their
existing one. 

They would eventually introduce a streaming model in 2010 that
we all know today. 

Netflix’s model would directly challenge the market
dominance of rental giants like Blockbuster^[12] at the time. As we know
today, Blockbuster could not compete and filed for bankruptcy in 2010^[13].  

But this never needed to happen. Years before, Blockbuster
could have actually partnered or even bought Netflix
out.

“In 2000, Netflix CEO and co-founder Reed Hastings
approached Blockbuster ^[14]about a partnership.
Unfortunately for Blockbuster, their CEO just smiled and laughed at
him.

In fact, Blockbuster even had a chance to purchase Netflix
for $50 million. Netflix currently has a Market Cap
of [116.42B]^[15] (2019) and a share
price of  $331.89, while Blockbuster is out
of business.” – rewindandcapture.com.^[16] 

Why is Netflix called Netflix?

You may, or may not, have been able to work this out for
yourself. But in case you are still stumped, the name Netflix is a
combination of “Net” (common parlance abbreviation of the internet”
and “Flix” (a common abbreviation of “flicks” which n turn is slang
for a movie or film). 

Pretty straight forward really. 

How was Netflix founded?

At the time Netflix was founded, Marc was working as a
marketing director for Hasting’s company Pure Atria. He was also
the co-founder of MicroWarhouse (a computer mail-order
company).

Hasting would later sell Pure Atria to the Rational
Software Corporation in 1997 for $700
million. 

By all accounts, the pair came up with the idea for
Netflix during a commute between their homes in Santa Cruz and Pure
Atria’s HQ in Sunnyvale prior to Pure Atria’s acquisition and
merger. 

Reed would supply the seed capital and
invested $2.5 million into the startup in
cash. Inspired by Amazon’s e-commerce model, the pair explored
various portable items they could use to sell over the internet in
a similar fashion.

After initially considering and rejecting VHS cassettes,
they settled on DVDs as the perfect product. After testing their
idea by posting one to their homes in Santa Cruz, and it arriving
in perfect condition, they decided the time was right to break into
the market with their new revolutionary model.

Netflix launched in April of 1998 and became the world’s
first online DVD rental and merchant. They had only a few tens of
staff and just under 1000 titles at the time. 

The rest, as they say, is history.

Some of the key milestones in Netflix’s
history

Here is a brief timeline of some of the critical
milestones in the company’s history (courtesy of everydayelectronic.com^[17]): –

1997 – Reed Hastings and software
executive Marc Randolph co-found Netflix to offer online movie
rentals.

1998 – Netflix launches the first DVD
rental and sales site, Netflix.com.

1999 – Netflix debuts a subscription
service, offering unlimited DVD rentals for one low monthly
price.

2000 – Netflix introduces a
personalized movie recommendation system, which uses Netflix
members’ ratings to accurately predict choices for all Netflix
members.

2002 – Netflix makes its first public
offering (IPO on Nasdaq under the ticker “NFLX” with 600,000
members in the US.)

Source: Matthew Keys/Flickr^[18]

2005 – The number of Netflix members
rises to 4.2 million.

2007 – Netflix introduces streaming,
which allows members to instantly watch television shows and movies
on their personal computers.

2008 – Netflix partners with consumer
electronics companies to stream on the Xbox 360, Blu-ray disc
players and TV set-top boxes.

2009 – Netflix partners with consumer
electronics companies to stream on the PS3, Internet-connected TVs,
and other Internet-connected devices.

2010 – Netflix is available on the
Apple iPad, iPhone and iPod Touch, the Nintendo Wii, and other
Internet-connected devices. Netflix launches its service in
Canada.

2011 – Netflix launches throughout
Latin America and the Caribbean.

2012 – Netflix became available in
Europe including the United Kingdom, Ireland and in the Nordic
Countries. Netflix wins its first Primetime Emmy Engineering
Award.

Source:
Stock Catalog/Flickr^[19]

2013 – Netflix received 31 primetime
Emmy nominations including outstanding drama series, comedy series
and documentary or nonfiction special for “House of Cards”, “Orange
is the new black”, and “The Square” respectively. House of Cards
won three Primetime Emmy Awards. Netflix was the first internet TV
network nominated for the Primetime Emmy.

2014 – In 2014 Netflix launched into
6 new countries in Europe (Austria, Belgium, France, Germany,
Luxembourg, and Switzerland). Netflix wins 7 creative Emmy Awards
for “House of Cards” and “Orange Is the New Black”. Netflix now has
over 50 million members globally.

2015 – Netflix launches in Australia,
New Zealand and Japan, with continued expansion across Europe in
Italy, Spain and Portugal. The first Netflix original feature film
“Beasts of No Nation” is released.

2016 onwards – Netflix is available
worldwide.