Netflix – Revolutionary Viewing
On the 14th April 1998 Netflix launched as the first online DVD rental store, a move that would take the market by storm and in turn revolutionise how we watch TV and movies. Offering an unrivalled range of titles for viewers to experience at just a few dollars per rental, together with the sophisticated website that provided a unique shopping experience for movie fans, Netflix were on to a winner. On the anniversary of its launch, we reflect on the massive success that Netflix has achieved and take a look at how it all began.
Netflix was the result of a collaboration between Reed Hastings and Marc Randolph, who met when both were involved in Pure Software, a business which Hastings had founded in October 1991 and which had acquired the quality assurance company which Randolph had founded with 2 friends. Randolph was also the co-founder of MicroWarehouse, the PC mail order giant. It is widely believed that Hastings came up with the idea for Netflix following a $40 fine for overdue rental fees, what we do know is that following the acquisition of what was then known as Pure Atria by Rational Software, Hastings had the funds to set up Netflix with Randolph and in August 1997 Netflix was founded in Scotts Valley, Santa Cruz California.
In 1998 Netflix.com was launched enabling customers to rent or buy DVDs with an unprecedented range of titles on offer, at a time when this new technology brought so much more to the viewer’s experience in terms of picture and sound quality as well as extras, languages and interaction. Initially, a seven day rental period was offered with Netflix offering same day shipping and pre-paid mailers enabling those renting to easily return their DVDs. The Netflix website provided a wealth of information including film facts, DVD features and reviews and also allowed users to easily search for the films they wanted with the FlixFinder functionality using either the title, actor or director of their choice. Netflix also offered recommendations to the viewer based on their previous rental selections as well as a chance to Browse the Aisles where titles were organised by genre or theme.
With the online shopping cart, DVDs could be rented or bought with Netflix charging a rental fee of $4 each for the first 2 movie selections, with a charge of $3 for further titles on the same order. A small shipping charge of $2 for the first DVD and $1 for additional titles on the same order to a maximum of $5 was also applied and gave viewers great entertainment and low prices, with Netflix shipping anywhere in the US. Those keen to be the first to view new releases were able to reserve titles not yet available for a fee of $5 with Netflix fulfilling orders on the day of the film’s release, with a priority overnight delivery also an option Netflix provided. Flexibility was also a key in Netflix’s offering with the viewers able to buy a DVD that they had rented by simply emailing notification to Netflix who then deducted the rental charge from the purchase price charged to the customer’s credit card, this was known as the Like it? Keep It! Programme. The Netflix Secure Checkout also allowed customers to make their purchases with confidence.
With the initial sales of DVD players surpassing both compact discs and VCRs, Netflix played an important part in the growth of this new market, as well as fulfilling a need in the rental market for a reliable and economic solution that provided users with information and choice.
In 1999 Netflix introduced their subscription service with unlimited rentals for a monthly fee and the following year launched its personalised recommendation system based on Netflix Member ratings. In 2002 with over 600,000 members Netflix shares were offered at $15 per share with an initial public offering on NASDAQ, and by the end of that year its members had increased to 857,000.
With continued growth by 2005 4.2milion members were using Netflix, and with the introduction of streaming in 2007 the number had increased to 7.5million. Further developments by Netflix to allow streaming on a range of devices including PS3 and Wii as well as iPad and iPhones would achieve viewers of over 20million in 2010. Today, its massive global following continues to grow which now includes over 44 million streaming members, who watch over a billion hours of TV and movies on a monthly basis, anytime anywhere.