Netflix was founded in 1997 in Scotts Valley, California by Reed Hastings and Marc Randolph. The idea of Netflix popped into Reed Hastings mind after he was forced to pay $40 in late fees for returning Apollo 13 well after its due date. The Netflix website was launched on August 29, 1997 with only 30 employees and 925 works available for rent.
In the beginning
Netflix started out with the traditional pay-per-rental model that Blockbuster and other competitors used except their service's had a twist to it. Instead of requiring customers to drive to their store and rent a DVD, Netflix allowed for customers to order a rental DVD online and have the DVD mailed to the customer's home. While this model was working quite well for the company, Netflix decided to try out a new concept. In September 1999, Netflix introduced the option of a monthly subscription to their customers. Not too long after introducing the monthly subscription, Netflix actually dropped their single-rental model in early 2000. By introducing the monthly subscription, Netflix started to build its reputation on their new business model of unlimited rentals for a single monthly rate with no due dates, late fees or shipping and handling fees. In 2000, Netflix was offered up to Blockbuster for $50 million but Blockbuster did not think Netflix could hurt the company and so decided against buying Netflix.
Advancements over the years
By the time 2003 came around, Netflix hit the one million subscribers mark and there were no signs of stopping. By 2005, Netflix was shipping approximately one million DVDs by mail per day and had over thirty-five thousand titles to choose from. During this same year, Netflix began developing a recommendation system to viewers based off their viewing habits and ratings. A year after introducing the recommendation system, Netflix offered up a one million dollar prize to the first developer of a video recommendation algorithm that could beat its existing algorithm. In 2007, Netflix made one of the greatest business decisions the company has ever seen. Netflix began offering streaming on demand videos for viewing from a PC or web-enabled device. Originally, Netflix did not charge extra for the streaming service. They were testing the waters with this new streaming service and wanted to see how customers reacted to it. Once Netflix saw how much their customers thoroughly enjoyed the streaming service, they decided to begin charging people for that service. Netflix did this in part because they knew online streaming was going to be the new way to watch movies and shows but also because they wanted to reduce their costs and reliance upon physical DVDs, warehouses and postage.
Netflix's Mistake
In 2011, Netflix CEO Reed Hastings announced in September that the company would charge separately for the DVD rentals and the streaming content, and that a new company called Qwikster would be formed to handle the physical DVD rentals, while Netflix retained the streaming. Netflix subscribers were not happy about this change and gave Netflix a lot of negative feedback. This feedback caused Hastings to admit it was a mistake and scrapped all plans for separate billing and separate companies. The damage was already done though, this move caused for Netflix stock to drop seventy-five percent from its peak.
Original programming
Netflix announced it was developing original programs (TV shows) in March 2011. In 2013, Netflix premiered its first original program "House of Cards". It is only available to subscribers of Netflix and will not be on television. After "House of Cards" became such a hit, Netflix decided to continue to develop more original programs such as "Orange is the New Black" and "Hemlock Grove". Theses programs are becoming very popular and Netflix is showing no sign of stopping production for new programs.