The story
Founded by Netflix, Inc. in 2007.1
History
Launch as a mail-based rental business (1997–2006)
Netflix was founded by Marc Randolph and Reed Hastings as a DVD rental service on August 29, 1997, in Scotts Valley, California.
Launched on April 14, 1998, Netflix offered a per-rental model for each DVD but introduced a monthly subscription concept in September 1999, after which the per-rental model was dropped by early 2000. In 2005, 35,000 different films were available, and Netflix shipped 1 million DVDs out every day.
Through its Red Envelope Entertainment division, Netflix licensed and distributed independent films such as Born into Brothels (2004) and Sherrybaby (2006). In late 2006, Red Envelope Entertainment also expanded into producing original content with filmmakers such as John Waters. Netflix closed Red Envelope Entertainment in 2008.
Transition to streaming services (2007–2012)
Hastings reportedly told Mynette Louie in the late-1990s that his goal was always streaming media, and that Netflix rented DVDs only to grow its customer base for streaming. By the mid-2000s, data speeds and bandwidth costs improved sufficiently, allowing customers to download movies from the internet. The original idea was a "Netflix box" that could download movies overnight and be ready to watch the next day. By 2005, Netflix had acquired movie rights and designed the box and service. But after witnessing how popular streaming services such as YouTube were despite the lack of high-definition content, the concept of using a hardware device was scrapped and replaced with a streaming concept.
On January 16, 2007, the company launched a streaming media service, introducing video on demand via the Internet. However, at that time, it only had 1,000 films available for streaming, compared to 70,000 available on DVD. The service, then called "Watch Now", at first required Internet Explorer on a computer. Hollywood studios (including 20th Century Fox, Sony Pictures, MGM, Paramount Pictures, Universal Pictures, Warner Bros., New Line Cinema, and Lionsgate) licensed second-run content to the service, not expecting it to threaten their existing lucrative relationships with cable television.
In February 2007, Netflix delivered its billionth DVD, a copy of Babel (2006) to a customer in Texas. In April 2007, Netflix recruited ReplayTV founder Anthony Wood, to build a "Netflix Player" that would allow streaming content to be played directly on a television rather than a desktop or laptop. Hastings eventually shut down the project to help encourage other hardware manufacturers to include built-in Netflix support, which would be spun off as the digital media player product Roku.
In January 2008, all rental-disc subscribers became entitled to unlimited streaming at no additional cost. This change came in response to the introduction of Hulu and to Apple's new video-rental services. In August 2008, the Netflix database was corrupted and the company was unable to ship DVDs to customers for three days, leading the company to move all its data to the Amazon Web Services cloud. In November 2008, Netflix began offering subscribers rentals on Blu-ray and discontinued its sale of used DVDs. In 2009, Netflix streams overtook its DVD shipments.
In January 2010, Netflix agreed with Warner Bros. to delay new release rentals to 28 days after the DVDs became available for sale, in an attempt to help studios sell physical copies, and similar deals involving Universal Pictures and 20th Century Fox were reached on April 9. In February 2010, Netflix signed a deal to stream 300 indie movie titles. In July 2010, Netflix signed a deal to stream movies of Relativity Media. It also announced an expansion of its deal with Warner Bros. Television adding more shows, including Veronica Mars and Nip/Tuck. In August 2010, Netflix reached a five-year deal worth nearly $1 billion to stream films from Paramount, Lionsgate, and Metro-Goldwyn-Mayer. The deal increased Netflix's annual spending fees, adding roughly $200 million per year. It spent $117 million in the first six months of 2010 on streaming, up from $31 million in 2009. In September 2010, Netflix launched in Canada, its first international market. In November 2010, Netflix began offering a standalone streaming service separate from DVD rentals.
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In 2010, Netflix acquired the rights to Breaking Bad, produced by Sony Pictures Television, after the show's third season, at a point where original broadcaster AMC had expressed the possibility of canceling the show. Sony pushed Netflix to release Breaking Bad in time for the fourth season, which as a result, greatly expanded the show's audience on AMC due to new viewers binging on past episodes via Netflix, and doubling its viewership by the time of the fifth season. Breaking Bad is considered the first show to have this "Netflix effect".
In January 2011, Netflix announced agreements with several manufacturers to include branded Netflix buttons on the remote controls of devices compatible with the service, such as Blu-ray players. By May 2011, Netflix had become the largest source of Internet streaming traffic in North America, accounting for 30% of traffic during peak hours.
In July 2011, Netflix announced it would be separating its existing subscription plans into two: one covering the streaming and the other DVD rental services. The cost for streaming would be $7.99 per month, while DVD rental would start at the same price. In September 2011, Netflix expanded to countries in Latin America. That same month, Netflix announced its intentions to rebrand and restructure its DVD home media rental service as an independent subsidiary called Qwikster, separating DVD rental and streaming services. Customers reacted negatively, seeing this as a price increase and a betrayal of customer loyalty. Netflix's stock value dropped, and 800,000 of its 12 million customers cancelled their subscriptions. Netflix quickly apologized, and in October 2011, announced it would retain its DVD service under the name Netflix and that its streaming and DVD-rental plans would remain branded together.
On September 26, 2011, Netflix announced a content deal with DreamWorks Animation.
In October 2011, Netflix and The CW signed a multi-year output deal for its television shows. In January 2012, Netflix started its expansion to Europe, launching in the UK and Ireland. In February 2012, Netflix reached a multi-year agreement with The Weinstein Company. In March 2012, Netflix acquired the domain name DVD.com. By 2016, Netflix rebranded its DVD-by-mail service under the name DVD.com, A Netflix Company. In April 2012, Netflix filed with the Federal Election Commission (FEC) to form a political action committee (PAC) called FLIXPAC. Netflix spokesperson Joris Evers tweeted that the intent was to "engage on issues like net neutrality, bandwidth caps, UBB and VPPA". In June 2012, Netflix signed a deal with Open Road Films.
In August 2012, Netflix and The Weinstein Company signed a multi-year output deal for RADiUS-TWC films. In September 2012, Epix signed a five-year streaming deal with Netflix. For the initial two years of this agreement, first-run and back-catalog content from Epix was exclusive to Netflix. Epix films came to Netflix 90 days after premiering on Epix. These included films from Paramount, Metro-Goldwyn-Mayer, and Lionsgate.
In October 2012, Netflix launched in Denmark, Finland, Norway, and Sweden. In December 2012, Netflix and Disney announced an exclusive multi-year agreement for first-run US subscription television rights to Walt Disney Studios' animated and live-action films, with classics such as Dumbo (1941), Alice in Wonderland (1951), and Pocahontas (1995) available immediately and others available on Netflix beginning in 2016. Direct-to-video releases were made available in 2013.
In January 2013, Netflix signed an agreement with Time Warner's Turner Broadcasting System and Warner Bros. Television to distribute Cartoon Network, Warner Bros. Animation, and Adult Swim content, as well as TNT's Dallas, beginning in March 2013. The rights to these programs were given to Netflix shortly after deals with Viacom to stream Nickelodeon and Nick Jr. Channel programs expired.
For cost reasons, Netflix stated it would limit its expansion in 2013, adding only one new market—the Netherlands—in September of that year. This expanded its availability to 40 territories.
Development of original programming and distribution expansion (2013–2017)
Netflix had long closely analyzed its customers' preferences. Watch Now gave the company real-time data on their behavior, such as scenes that customers replayed or skipped, or when they stopped watching a show. In 2011, Netflix began its efforts into original content development. In March, it made a straight-to-series order from MRC for the political drama House of Cards, led by Kevin Spacey, outbidding American cable networks. This marked the first instance of a first-run television series being specifically commissioned by the service. Netflix executives said that its customers' love of films by Spacey and show director David Fincher caused the company to acquire the show. Customers' tendency to binge watch many episodes without stopping caused it to release all 13 episodes of the show's first season at the same time. In November the same year, Netflix added two more significant productions to its roster: the comedy-drama Orange Is the New Black (OITNB), adapted from Piper Kerman's memoir, and a new season of the previously canceled Fox sitcom Arrested Development. Netflix acquired the American rights to the Norwegian drama Lilyhammer after its television premiere on Norway's NRK1 in January 2012. Notably departing from the traditional broadcast television model of weekly episode premieres, Netflix chose to release the entire first season on February 8 of the same year.
House of Cards was released by Netflix on February 1, 2013, marketed as the first "Netflix Original" production. Later that month, Netflix announced an agreement with DreamWorks Animation to commission children's television series based on its properties, beginning with Turbo Fast, a spin-off of its film Turbo (2013). OITNB would premiere in July 2013; Netflix stated that OITNB had been its most-watched original series so far, with all of them having "an audience comparable with successful shows on cable and broadcast TV."
In March 2013, Netflix added a Facebook sharing feature, letting American subscribers access "Watched by your friends" and "Friends' Favorites" by agreeing. This was not legal until the Video Privacy Protection Act was modified in early 2013. In August 2013, Netflix reintroduced the "Profiles" feature that permits accounts to house up to five user profiles.
In November 2013, Marvel Television and ABC Studios announced Netflix had ordered a slate of four television series based on the Marvel Comics characters Daredevil, Jessica Jones, Iron Fist, and Luke Cage. Each of the four series received an initial order of 13 episodes, and Netflix also ordered a Defenders miniseries that would tie them together. Daredevil and Jessica Jones premiered in 2015. The Luke Cage series premiered in September 2016, followed by Iron Fist in March 2017, and The Defenders in August 2017. Marvel owner Disney later entered into other content agreements with Netflix, including acquiring its animated Star Wars series Star Wars: The Clone Wars, and a new sixth season.
In February 2014, Netflix began to enter into agreements with American internet service providers, beginning with Comcast (whose customers had repeatedly complained of frequent buffering when streaming Netflix), to provide the service a direct connection to their networks. In April 2014, Netflix signed Arrested Development creator Mitchell Hurwitz and his production firm The Hurwitz Company to a multi-year deal to create original projects for the service. In May 2014, Netflix and Sony Pictures Animation had a major multi-deal to acquire streaming rights to produce films. It also began to introduce an updated logo, with a flatter appearance and updated typography.
In September 2014, Netflix expanded into six new European markets, including Austria, Belgium, France, Germany, Luxembourg, and Switzerland. On September 10, 2014, Netflix participated in Internet Slowdown Day by deliberately slowing down its speed in support of net neutrality regulations in the US. In October 2014, Netflix announced a four-film deal with Adam Sandler and his Happy Madison Productions.
In April 2015, following the launch of Daredevil, Netflix director of content operations Tracy Wright announced that Netflix had added support for audio description, and had begun to work with its partners to add descriptions to its other original series over time. The following year, as part of a settlement with the American Council of the Blind, Netflix agreed to provide descriptions for its original series within 30 days of their premiere, and add screen reader support and the ability to browse content by availability of descriptions.
In March 2015, Netflix expanded to Australia and New Zealand. In September 2015, Netflix launched in Japan, its first country in Asia. In October 2015, Netflix launched in Italy, Portugal, and Spain.
In January 2016, at the Consumer Electronics Show, Netflix announced a major international expansion of its service into 130 additional countries, making it available worldwide except in China, Syria, North Korea, Kosovo, and Crimea. As part of this expansion, Netflix officially launched its services in Africa, with a focus on South Africa, Kenya, and Nigeria. Between 2018 and 2020, Netflix had started making significant investments in African storytelling, and hired Dorothy Ghettuba, a Kenyan media entrepreneur, as head of African Originals. According to the company, it has invested the equivalent of €160 million in film content production in Africa since it began working on the continent in 2016, with over 12,000 jobs created across Nigeria, Kenya, and South Africa.
In April 2016, Hastings stated that the company planned to expand its in-house, Los Angeles-based Netflix Studios to grow its output; Hastings ruled out any potential acquisitions of existing studios. In May 2016, Netflix created a tool called Fast.com to determine the speed of an Internet connection. It received praise for being "simple" and "easy to use", and does not include online advertising, unlike competitors. In November 2016, Netflix launched an offline playback feature, allowing users of the Netflix mobile apps on Android or iOS to cache content on their devices in standard or high quality for viewing offline, without an Internet connection. Netflix released an estimated 30 original series or films over that year, more than any network or cable channel.
In February 2017, Netflix signed a music publishing deal with BMG Rights Management, whereby BMG would oversee rights outside of the US for music associated with Netflix Original content. Netflix continues to handle these tasks in-house in the US. In April 2017, Netflix signed a licensing deal with IQIYI, a Chinese video streaming platform owned by Baidu, to allow selected Netflix Original content to be distributed in China on the platform.
In August 2017, Netflix acquired Millarworld, the creator-owned publishing company of comic book writer Mark Millar. The purchase marked the first corporate acquisition to have been made by Netflix. That same month, Netflix entered into an exclusive development deal with Shonda Rhimes and her production company Shondaland.
In September 2017, Netflix announced it would offer its low-broadband mobile technology to airlines to provide better in-flight Wi-Fi so passengers could watch movies on Netflix while on planes. That same month, Minister of Heritage Mélanie Joly announced that Netflix had agreed to make a CA$500 million (US$400 million) investment over the next five years in producing content in Canada. The company denied that the deal was intended to result in a tax break. Netflix realized this goal by December 2018.
In October 2017, Netflix iterated a goal of having half of its library consist of original content by 2019, announcing a plan to invest $8 billion on original content in 2018. In October 2017, Netflix introduced the "Skip Intro" feature, which allows customers to skip the intros to shows on its platform through a variety of techniques including manual reviewing, audio tagging, and machine learning.
In November 2017, Netflix signed an exclusive multi-year deal with Orange Is the New Black creator Jenji Kohan. That same month, Netflix withdrew from co-hosting a party at the 75th Golden Globe Awards with The Weinstein Company due to the Harvey Weinstein sexual abuse cases.
Expansion into international productions and new productions, Co-CEOs (2017–2020)
In November 2017, Netflix announced it would be making its first original Colombian series, to be executive produced by Ciro Guerra. In December 2017, Netflix signed Stranger Things director-producer Shawn Levy and his production company 21 Laps Entertainment to what sources say is a four-year deal. In 2017, Netflix invested in distributing exclusive stand-up comedy specials from Dave Chappelle, Louis C.K., Chris Rock, Jim Gaffigan, Bill Burr, and Jerry Seinfeld.
In February 2018, Netflix acquired the rights to The Cloverfield Paradox (2018) from Paramount Pictures for $50 million and launched it on February 4, 2018, shortly after airing its first trailer during Super Bowl LII. Analysts believed that Netflix's purchase of the film helped to make the film instantly profitable for Paramount compared to a more traditional theatrical release, while Netflix benefited from the surprise reveal. Other films acquired by Netflix include international distribution for Paramount's Annihilation (2018) and Universal's News of the World (2020) and worldwide distribution of Universal's Extinction (2018), Warner Bros.' Mowgli: Legend of the Jungle (2018), Paramount's The Lovebirds (2020) and 20th Century Studios' The Woman in the Window (2021). In March, the service ordered Formula 1: Drive to Survive, a racing docuseries following teams in the Formula One world championship.
In March 2018, Sky UK announced an agreement with Netflix to integrate Netflix's subscription VOD offering into its pay-TV service. Customers with its high-end Sky Q set-top box and service will be able to see Netflix titles alongside their regular Sky channels. In October 2022, Netflix revealed that its annual revenue from the UK subscribers in 2021 was £1.4bn.
In April 2018, Netflix pulled out of the Cannes Film Festival, in response to new rules requiring competition films to have been released in French theaters. The Cannes premiere of Okja in 2017 was controversial, and led to discussions over the appropriateness of films with simultaneous digital releases being screened at an event showcasing theatrical film; audience members also booed the Netflix production logo at the screening. Netflix's attempts to negotiate to allow a limited release in France were curtailed by organizers, as well as French cultural exception law—where theatrically screened films are legally forbidden from being made available via video-on-demand services until at least 36 months after their release. Besides traditional Hollywood markets as well as from partners like the BBC, Sarandos said the company was also looking to expand investments in non-traditional foreign markets due to the growth of viewers outside of North America. At the time, this included programs such as Dark from Germany, Ingobernable from Mexico, and 3% from Brazil.
In May 2018, former president, Barack Obama, and his wife, Michelle Obama, signed a deal to produce docuseries, documentaries, and features for Netflix under the Obamas' newly formed production company, Higher Ground Productions.
Original programming
"Netflix Originals" are content that is produced, co-produced, or distributed exclusively by Netflix. Netflix funds its original shows differently than other TV networks when it signs a project, providing the money upfront and immediately ordering two seasons of most series. It keeps licensing rights, which normally give production companies future revenue opportunities from syndication, merchandising, etc.
Over the years, Netflix output ballooned to a level unmatched by any television network or streaming service. According to Variety Insight, Netflix produced a total of 240 new original shows and movies in 2018, then climbed to 371 in 2019, a figure "greater than the number of original series that the entire U.S. TV industry released in 2005." The Netflix budget allocated to production increased annually, reaching $13.6 billion in 2021 and projected to hit $18.9 billion by 2025, a figure that once again overshadowed any of its competitors. As of August 2022, original productions made up 50% of Netflix's overall library in the US.
From Wikipedia’s article on Netflix, shared under CC BY-SA 4.0.4