Netflix a Streaming Success
On a hot and dusty day in 1997, two men named Reed Hastings and Marc Randolph were travelling between their homes in Santa Cruz, to their regular place of business, the Pure Atria's HQ in Sunnyvale. This was a trip which they had frequently undertaken, and as was their habit, passed the time by bouncing different business concepts between themselves. This everyday commute to work would result in the founding of the mega movie streaming corporation, we now know as Netflix, a company which would in just 20 years have a stock value of $152 billion and a membership of over 130 million members.
It should be pointed out that like many others both had already been inspired by the e-commerce model Amazon had recently created, so with this in mind, they searched for a product which was both easy to sell online and most importantly inexpensive and easy to deliver. By the time the two had reached work, both had decided that the simple DVD would fit the bill and the rest is history.
“Netflix” had been born, and in just 20 short years their fledgeling company would have a stock value of $152 billion, and boast a membership of over 130 million members or subscribers who came from all walks of life, and lived in all parts of the world.
After Reed supplied the initial startup capital of $2.5 million, Netflix, who had just 30 employees was unleashed on an unsuspecting world on the 24th of April 1998 with a catalog of 925 DVD titles, literally the full list of DVDs available at that time.
For their business model they used a similar concept which Blockbusters a traditional brick and mortar DVD rental company we're using, a simple DVD pay-per-rent where the user would go to the store and order a video, take it home then when watched would return it to the outlet thus enabling them to order another. If they were late returning the DVD then the user would be charged a late fee for every day the video was overdue.
However, Netflix would make some significant changes to the Blockbuster business model and allow its members to rent a DVD from the comfort of their own homes, do away with the overdue payment, thus allowing the user to simply keep the movie for as long as he or she wanted to with the understanding that they would not be able to rent another film until the said DVD had been returned back to Netflix in the pre-paid envelope supplied to them.
It did not take long, traditional brick and mortar DVD rental companies throughout North America found that they could no longer compete with Netflix's online DVD pay-per-rent business model, and many began to close their doors. One of them, the giant of that time, Blockbusters was also feeling the pressure, and as we all know now actually closed its doors for good in 2010 after filing for bankruptcy. However, surprisingly, this may not have ever happened if it was not for a colossal mistake, the CEO of Blockbusters at the time made.
Believe it or not, not long after Netflix had been in business, early on in the summer of 2000 Reed Hastings, one of the co-founders of Netflix approached Blockbusters offering them a partnership; however, the then confident CEO of Blockbusters simply smiled and brushed the offer off actually laughing in Reed’s face. This rebuttal would be a costly mistake, perhaps one of the most colossal business mistakes that any company CEO would make throughout the 20th Century, but it would not be the only mistake the Blockbuster CEO would make. Soon after refusing the partnership deal he was even given an option to buy out Netflix for the comparably knocked down price of $50 million, once again he did not take the opportunity.
Today Netflix has a Market Cap of $116.42 billion, and if you want to buy just one single Netflix share, it will cost you the princely sum of $331.89. On the other hand, if you wanted to buy one Blockbuster share today, it will cost you nothing as Blockbuster does not, as we all know, exist anymore. Blockbuster on the 12th of January 2014 simply gave up the ghost and closed their last remaining 300 corporate stores thus in the process, ending their DVD rental by mail program.
Just like many other traditional brick and mortar shopping outlets, Blockbuster had fallen victim to the publics overwhelming turn to the convenience and love of online shopping which companies like, Netflix, Amazon, BargainBrute and Shopify just to name three, were now beginning to offer online.
The rest is history, Netflix would, in 2010, introduce a video streaming system to take the place of their DVD rental section, thus becoming what we know it as today, and to be honest, it is hard to imagine today a world without Netflix, and with earnings in 2018 approaching US$1.21 billion, and shares valued at $400.00 apiece Netflix shows no sign of slowing down, and will continue their climb up the Fortune 500 list, a list made up of the largest companies headquartered in America where they are currently ranked 261.
It's easy for us to reflect using hindsight, but I have to wonder just what the ex CEO of Blockbuster is thinking now, knowing that he could have been part of a business which is operated in over 190 countries, has produced and released an estimated 130 original series and movies in 2016 alone. More than any other cable channel or network anywhere on the planet ever came close to.
Well, my friends we have come to the end of another short narrative, and I hope you enjoyed our inside view of the mega-giant Netflix and wish you many happy hours of watching your favorite movies supplied by the nations most beloved video streaming service Netflix. I would also like to take the time to thank BargainBrute.Com voted America's favorite place to shop online in 2019 for giving me the platform to write upon.
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