Netflix

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From Wikipedia, the free encyclopedia

This article is about the media service. For other uses, see Netflix
(disambiguation).
Netflix, Inc.

Logo used since 2015

show
Screenshot

Type of business Public

Type of site OTT streaming platform

Available in show

List

Traded as Nasdaq: NFLX

Nasdaq-100 component

S&P 100 component

S&P 500 component

Founded August 29, 1997; 25 years ago[3] in Scotts

Valley, California, U.S.

Headquarters Los Gatos, California, U.S.

Area served Worldwide (excluding Mainland China, North

Korea, Russia and Syria)[4][5]

Founder(s) Reed Hastings

Marc Randolph

Key people Reed Hastings

(Executive Chairman)

Ted Sarandos

(Co-CEO)

Greg Peters

(Co-CEO)

Industry Technology & Entertainment industry, mass

media

Products Streaming media

 Pay television

Video on demand

Mobile gaming

Services Film production

Film distribution

Television production

Television distribution

 US$31.6 billion (2022)

Revenue

 US$5.6 billion (2022)

Operating income

 US$4.5 billion (2022)

Net income

 US$48.6 billion (2022)

Total assets

 US$20.8 billion (2022)

Total equity

Employees 12,800 (2022)

Divisions US Streaming

International Streaming

Domestic DVD

Subsidiaries DVD Netflix (dvd.netflix.com)

Millarworld[6]

LT-LA[7]

Albuquerque Studios

Netflix Pictures

Netflix Studios

Netflix Animation

StoryBots, Inc.

Grauman's Egyptian Theatre[8]

Broke and Bones (stake)[9]

Roald Dahl Story Company

Night School Studio

Netflix Pty Ltd

Scanline VFX

Next Games

Boss Fight Entertainment

Animal Logic

Spry Fox

URL netflix.com

Registration Required

 231 million
Users

[10][11]
Netflix, Inc. is an American subscription video on-demand over-the-
top streaming service and production company based in Los Gatos,
California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts
Valley, California, it offers a film and television series library
through distribution deals as well as its own productions, known as Netflix
Originals.

As of January 2023, Netflix had over 230 million subscribers worldwide,

including 74.3 million in the United States and Canada; 76.7 million in Europe,
the Middle East and Africa, 41.7 million in Latin America and 38 million in
the Asia-Pacific region.[11] It is available worldwide aside from Mainland China,
Syria, North Korea, and Russia. Netflix has played a prominent role
in independent film distribution, and it is a member of the Motion Picture
Association.

Netflix can be accessed via web browsers or via application software installed

on smart TVs, set-top boxes connected to televisions, tablet
computers, smartphones, digital media players, Blu-ray players, video game
consoles and virtual reality headsets on the list of Netflix-compatible devices.
[12][13][14][15] It is available in 4K resolution.[16] In the United States, the company

provided Digital Video Disc (DVD)[17] and Blu-ray rentals delivered individually

via the United States Postal Service from regional warehouses.[18]

Netflix initially both sold and rented DVDs by mail, but the sales were
eliminated within a year to focus on the DVD rental business. [19][20] In 2007,
Netflix introduced streaming media and video on demand. The company
expanded to Canada in 2010, followed by Latin America and the Caribbean.
Netflix entered the film and television production industry in 2013, debuting its
first series House of Cards. In January 2016, it expanded to an additional 130
countries and then operated in 190 countries.

The company is ranked 115th on the Fortune 500[21] and 219th on the Forbes 

Global 2000.[22] It is the second largest entertainment/media company
by market capitalization as of February 2022.[23] In 2021, Netflix was ranked as
the eighth-most trusted brand globally by Morning Consult.[24] During the
2010s, Netflix was the top-performing stock in the S&P 500 stock market
index, with a total return of 3,693%.[25][26]

Netflix is headquartered in Los Gatos, California, in Santa Clara County,[27]

[28] with the two CEOs, Greg Peters and Ted Sarandos, split between Los

Gatos and Los Angeles, respectively.[29][30][31] It also operates international

offices in Asia, Europe and Latin America including in Canada, France, Brazil,
the Netherlands, India, Italy, Japan, Poland, South Korea and the United
Kingdom. The company has production hubs in Los Angeles, [32] Albuquerque,
[33] London,[34] Madrid, Vancouver and Toronto.[35] Compared to other

distributors, Netflix pays more for TV shows up front, but keeps more "upside"
(i.e. future revenue opportunities from possible syndication, merchandising,
etc.) on big hits.[36][37]
History[edit]
For a chronological guide, see Timeline of Netflix.

Netflix logo history

First logo, used from 1997 to 2000

Second logo, used from 2000 to 2001

Third logo, used from 2001 to 2014

Fourth and current logo, used since 2014

Launch as a mail-based rental business (1997–2006)[edit]

 Marc Randolph, co-founder of Netflix and the first CEO of the company

Reed Hastings, co-founder and the current chairman and CEO

Netflix was founded by Marc Randolph and Reed Hastings on August 29,

1997, in Scotts Valley, California. Hastings, a computer scientist and
mathematician, was a cofounder of Pure Atria, which was acquired
by Rational Software Corporation that year for $750 million, the then biggest
acquisition in Silicon Valley history.[38] Randolph had worked as a marketing
director for Pure Atria after Pure Atria acquired a company where Randolph
worked. He was previously a co-founder of MicroWarehouse, a computer
mail-order company as well as vice president of marketing for Borland
International.[39][40] Hastings and Randolph came up with the idea for Netflix
while carpooling between their homes in Santa Cruz, California, and Pure
Atria's headquarters in Sunnyvale.[20] Patty McCord, later head of human
resources at Netflix, was also in the carpool group. [41] Randolph
admired Amazon.com and wanted to find a large category of portable items to
sell over the Internet using a similar model. Hastings and Randolph
considered and rejected selling and renting VHS tapes as too expensive to
stock and too delicate to ship.[39] When they heard about DVDs, first
introduced in the United States in early 1997, they tested the concept of
selling or renting DVDs by mail by mailing a compact disc to Hastings's house
in Santa Cruz.[39] When the disc arrived intact, they decided to enter the
$16 billion home-video sales and rental industry.[39][20] 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, a claim since repudiated by
Randolph.[20] Hastings invested $2.5 million into Netflix from the sale of Pure
Atria.[42][20] Netflix launched as the first DVD rental and sales website with 30
employees and 925 titles available—nearly all DVDs published. [20][43]
[44] Randolph and Hastings met with Jeff Bezos, where Amazon offered to

acquire Netflix for between $14 and $16 million. Fearing competition from
Amazon, Randolph at first thought the offer was fair, but Hastings, who owned
70% of the company, turned it down on the plane ride home. [45][46]

Initially, Netflix offered a per-rental model for each DVD but introduced a
monthly subscription concept in September 1999. [47] The per-rental model was
dropped by early 2000, allowing the company to focus on the business model
of flat-fee unlimited rentals without due dates, late fees, shipping and handling
fees, or per-title rental fees.[48] In September 2000, during the dot-com bubble,
while Netflix was suffering losses, Hastings and Randolph offered to sell the
company to Blockbuster LLC for $50 million. John Antioco, CEO of
Blockbuster, thought the offer was a joke and declined, saying, "The dot-com
hysteria is completely overblown."[49][50] While Netflix experienced fast growth
in early 2001, the continued effects of the dot-com bubble collapse and
the September 11 attacks caused the company to hold off plans for its initial
public offering (IPO) and to lay off one-third of its 120 employees.[51]

Opened Netflix rental envelope containing a DVD copy of Coach Carter (2005)

DVD players were a popular gift for holiday sales in late 2001, and demand
for DVD subscription services were "growing like crazy", according to chief
talent officer Patty McCord.[52] The company went public on May 29, 2002,
selling 5.5 million shares of common stock at US$15.00 per share.[53] In 2003,
Netflix was issued a patent by the U.S. Patent & Trademark Office to cover its
subscription rental service and several extensions. [54] Netflix posted its first
profit in 2003, earning $6.5 million on revenues of $272 million; by 2004, profit
had increased to $49 million on over $500 million in revenues. [55] In 2005,
35,000 different films were available, and Netflix shipped 1 million DVDs out
every day.[56]

In 2004, Blockbuster introduced a DVD rental service, which not only allowed
users to check out titles through online sites but allowed for them to return
them at brick-and-mortar stores.[57] By 2006, Blockbuster's service reached
two million users, and while trailing Netflix's subscriber count, was drawing
business away from Netflix. Netflix lowered fees in 2007. [55] 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.
[57]

On April 4, 2006, Netflix filed a patent infringement lawsuit in which it

demanded a jury trial in the United States District Court for the Northern
District of California, alleging that Blockbuster LLC's online DVD
rental subscription program violated two patents held by Netflix. The
first cause of action alleged Blockbuster's infringement of copying the
"dynamic queue" of DVDs available for each customer, Netflix's method of
using the ranked preferences in the queue to send DVDs to subscribers, and
Netflix's method permitting the queue to be updated and reordered. [58] The
second cause of action alleged infringement of the subscription rental service
as well as Netflix's methods of communication and delivery. [59] The companies
settled their dispute on June 25, 2007; terms were not disclosed. [60][61][62][63]

On October 1, 2006, Netflix announced the Netflix Prize, $1,000,000 to the

first developer of a video-recommendation algorithm that could beat its
existing algorithm Cinematch, at predicting customer ratings by more than
10%. On September 21, 2009, it awarded the $1,000,000 prize to team
"BellKor’s Pragmatic Chaos."[64] Cinematch, launched in 2000, is a
recommendation system that recommended movies to its users, many of
which they might not ever had heard of before.[65][66]

Through its division Red Envelope Entertainment, Netflix licensed and

distributed independent films such as Born into Brothels and Sherrybaby. In
late 2006, Red Envelope Entertainment also expanded into producing original
content with filmmakers such as John Waters.[67] Netflix closed Red Envelope
Entertainment in 2008.[68][69]

Transition to streaming services (2007–2012)[edit]

In January 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.
[70] The company had for some time considered offering movies online, but it

was only in the mid-2000s that data speeds and bandwidth costs had
improved sufficiently to allow customers to download movies from the net.
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.[71]

In February 2007, Netflix delivered its billionth DVD, a copy of Babel to a

customer in Texas.[72][73] In April 2007, Netflix recruited Anthony Wood, one of
the early DVR business pioneers, to build a "Netflix Player" that would allow
streaming content to be played directly on a television set rather than a
desktop or laptop.[74] While the player was initially developed at Netflix, Reed
Hastings eventually shut down the project to help encourage other hardware
manufacturers to include built-in Netflix support. [75][76]

In January 2008, all rental-disc subscribers became entitled to unlimited

streaming at no additional cost. This change came in a response to the
introduction of Hulu and to Apple's new video-rental services.[77][78][page needed] In
August 2008, the Netflix database was corrupted and the company was not
able to ship DVDs to customers for 3 days, leading the company to move all
its data to the Amazon Web Services cloud.[79] In November 2008, Netflix
began offering subscribers rentals on Blu-ray and discontinued its sale of
used DVDs.[80] In 2009, Netflix streams overtook DVD shipments.[81]

On January 6, 2010, Netflix agreed with Warner Bros. to delay new release

rentals 28 days prior to retail, in an attempt to help studios sell physical
copies, and similar deals involving Universal Pictures and 20th Century
Fox were reached on April 9.[82][83][84] In July 2010, Netflix signed a deal to
stream movies of Relativity Media.[85] 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.[86] On September 22, 2010, the company first began offering
streaming service to the international market, in Canada. [87][88] In November
2010, Netflix began offering a standalone streaming service separate from
DVD rentals.[89]

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 cancelling 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 the Netflix past episodes, and doubling the viewership by the time
of the fifth season. Breaking Bad is considered the first such show to have this
"Netflix effect."[90]

In January 2011, Netflix introduced a Netflix button for certain remote controls,

allowing users to instantly access Netflix on compatible devices. [91] In May
2011, Netflix's streaming business became the largest source of Internet
streaming traffic in North America, accounting for 30% of traffic during peak
hours.[92][93][94][95] On July 12, 2011, Netflix announced that it would separate its
existing subscription plans into two separate plans: one covering the
streaming and the other DVD rental services.[96][97] The cost for streaming
would be $7.99 per month, while DVD rental would start at the same price.
[98] In September 2011, Netflix announced a content deal with DreamWorks

Animation.[99] In September 2011, Netflix expanded to 43 countries in Latin

America.[100][101][102] On September 18, 2011, 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.[103][104][105][106][107] On October 10, 2011, Netflix announced that it would
retain its DVD service under the name Netflix and that its streaming and DVD-
rental plans would remain branded together.[108][109]

On January 4, 2012, Netflix started its expansion to Europe, launching in the

United Kingdom and Ireland.[110] In February 2012, Netflix signed a licensing
deal with The Weinstein Company.[111][112] In March 2012, Netflix acquired
the domain name DVD.com.[113] By 2016, Netflix rebranded its DVD-by-mail
service under the name DVD.com, A Netflix Company.[114][115] In April 2012,
Netflix filed with the Federal Election Commission (FEC) to form a political
action committee (PAC) called FLIXPAC.[116] Netflix spokesperson Joris Evers
tweeted that the intent was to "engage on issues like net neutrality, bandwidth
caps, UBB and VPPA".[117][118] In June 2012, Netflix signed a deal with Open
Road Films.[119][120]

On August 23, 2012, Netflix and The Weinstein Company signed a multi-year

output deal for RADiUS-TWC films.[121][122] 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. [123] These
included films from Paramount, Metro-Goldwyn-Mayer and Lionsgate. [124][125]

On October 18, 2012, Netflix launched in Denmark, Finland, Norway and

Sweden.[126][127] On December 4, 2012, Netflix and Disney announced an
exclusive multi-year agreement for first-run United States subscription
television rights to Walt Disney Studios' animated and live-action films, with
classics such as Dumbo, Alice in Wonderland and Pocahontas available
immediately and others available on Netflix beginning in 2016. [128] Direct-to-
video releases were made available in 2013.[129][130] The agreement with Disney
ended in 2019 due to the launch of Disney+. Netflix retained the rights to
continue streaming the Marvel series that were produced for the service until
March 1, 2022, following Disney's reacquisition of the rights to those series. [131]

On January 14, 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. programs expired.[132]

Development of original programming (2013–2017)[edit]

This section is in list format but may read better as prose. You can help
by converting this section, if appropriate. Editing help is
available. (November 2021)

In 2013, the company decided to slow launches in Europe to control

subscription costs.[133]

In February 2013, Netflix announced it would be hosting its own awards

ceremony, The Flixies.[134]
On March 13, 2013, Netflix added a Facebook sharing feature, letting United
States subscribers access "Watched by your friends" and "Friends' Favorites"
by agreeing.[135] This was not legal until the Video Privacy Protection Act was
modified in early 2013.[136]

In February 2013, DreamWorks Animation and Netflix co-produced Turbo

Fast, based on the movie Turbo, which premiered in July.[137][138] Netflix has
since become a major distributor of animated family and kid shows.