The Story Behind The Ticker: NFLX
How “the premier DVD-by-mail” became “the best streaming service”, had troubles with Napoleon Dynamite, had to ask hackers for help, once wasn’t sold to Amazon, but later wasn’t bought by Blockbuster.
1997: Reed Hastings, a computer scientist and mathematician, and his carpool mate marketing director Marc Randolph came up with the idea for Netflix while chatting about a large category of portable stuff to sell over the Internet.
1997: When they heard about DVDs, first introduced in the United States on March 24, 1997, they tested the concept of selling or renting “DVD-by-mail” by mailing a compact disc to Hastings’s house in Santa Cruz. Eureka! The disk arrived intact.
→1998: Netflix.com, the first DVD rental and sales site, is launched. With only 30 employees and 925 titles available — almost the entire catalogue of DVDs at the time.
→1998: Randolph and Hastings met with Jeff Bezos, where Amazon offered to acquire Netflix for ~$15M. Fearing competition from Amazon, Randolph at first thought the offer was fair but Hastings, who had guts (and a major 70% of the company) declined the offer.
→1999: The Netflix subscription service debuts, offering members unlimited DVD rentals without due dates, late fees, or monthly rental limits.
→Hastings is often quoted saying that he decided to start Netflix after being fined $40 at a Blockbuster store for being late to return a copy of Apollo 13, but he and Randolph designed this apocryphal story to explain the company’s business model and motivation.
→2000: In September, during the dot-com bubble, while Netflix was suffering losses, founders offered to sell the company to Blockbuster for $50M. John F. Antioco, CEO of Blockbuster, thought the offer was a joke and declined, saying “The dot-com hysteria is completely overblown”.
→2000: Boom! A personalized movie recommendation system is introduced, using members’ ratings on past titles to accurately predict future choices.
→2001: While Netflix experienced fast growth, the continued effects of the dot-com bubble collapse and the 9/11 attacks caused the company to hold off plans for its IPO and to lay off one-third of its 120 employees.
→DVD players were a popular gift for holiday sales in late 2001, and demand for DVD subscription services were “growing like crazy” *rocket**moon*.
→2002: On May 23, the ticker NFLX was born. Netflix became a publicly traded company, selling 5.5 million shares of common stock at $15.00 per share.
→2003: First profit was posted, earning $6.5M on revenues of $272M.
→2004: Profit had increased to $49M on over $500M in revenues.
→2004: Blockbuster introduced a DVD rental service, which not only allowed users to check out titles through online sites, but allowed returns at brick-and-mortar stores.
→2005: The Profiles feature launches, allowing members to create different lists for different users and/or different moods. 35,000 different films were available, and Netflix shipped 1,000,000 DVDs out every day.
→2006: Blockbuster’s service reached two million users, and while trailing Netflix’s subscriber count, was step by step drawing business away from Netflix with its 5 million members back then.
→2006: Netflix announced the Netflix Prize, $1,000,000 to the first developer (hacker) of a video-recommendation algorithm that could beat its existing algorithm “Cinematch”, at predicting customer ratings by more than 10%.
→2007: Netflix lowered fees. (While it was an urban legend that Netflix ultimately “killed” Blockbuster in the DVD rental market, Blockbuster’s debt load and internal disagreements hurt the company.
→2007: Bam! Streaming is introduced, allowing members to instantly watch series and films.
→2008: Troubles with Napoleon Dynamite in the perfectly-told NY Times story “If You Liked This, You’re Sure to Love That” by Clive Thompson.
→2009: After nearly three years and 40,000 submissions, the $1,000,000 Netflix Prize is awarded to the team Bellkor’s Pragmatic Chaos for improving the accuracy of recommendations by 10%. Streaming partnerships expand to internet connected TVs as membership surpasses 10 million.
→2010: Netflix arrives in Canada and streaming launches on mobile devices. The first dedicated kids experience debuts on streaming.
→2011: Netflix launches in Latin America and the Caribbean. The first Netflix button appears on remote controls.
→2012: Membership reaches 25 million members, and expands into the UK, Italy and Nordic Countries. Netflix ventures into stand-up specials with “Bill Burr: You People Are All the Same.”
→2013: “House of Cards”, “Hemlock Grove”, “Arrested development” and “Orange Is The New Black” usher in the first state of Original Series programming. “House of Cards” goes on to win three Primetime Emmy awards.
→2014: Membership surpasses 50 million and extends to Austria, Belgium, France, Germany, Netherlands and Switzerland
→To date: Netflix is the largest entertainment/media company by market capitalization. Think of investing in NFLX? Built for curious minds, Finsily offers an unparalleled level of details about companies’ operations, check out now →Finsily. Analyze NFLX easily.
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