Netflix Funding Prioir To Ipo

Netflix funding prioir to ipo

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

Internet video streaming and DVD-by-mail service with original and licensed content

Screenshot

Screenshot of Netflix English website

Type of businessPublic

Type of site

OTT platform
Traded as
FoundedAugust 29, 1997; 22 years ago (1997-08-29)[1] in Scotts Valley, California
HeadquartersLos Gatos, California, U.S.

Production hubs:

Area servedWorldwide, except for Mainland China, Syria, North Korea and Crimea[6]
Founder(s)
Key people
IndustryEntertainment, mass media
Products
Services
  • Film production
  • film distribution
  • television production
RevenueUS$15.794 billion (2018)[7]
Operating income US$1.605 billion (2018)[7]
Net income US$1.211 billion (2018)[7]
Total assets US$25.974 billion (2018)[7]
Total equity US$5.289 billion (2018)[7]
Employees6,700 (2019)
DivisionsUS Streaming
International Streaming
Domestic DVD[8]
Subsidiaries
  • DVD.com
  • Millarworld[9]
  • LT-LA[10]
  • ABQ Studios
  • Netflix Animation
  • Netflix Pte.

    Why Roku's IPO will be worth watching

    Ltd.

  • Netflix Services UK Limited
  • Netflix Streaming Services International B.V.
  • Netflix Streaming Services, Inc.
  • Netflix Global, LLC
  • Netflix Services Germany GmbH
  • NetflixCS, Inc.
  • Netflix Luxembourg S.a r.l.
  • Netflix Studios
  • Netflix Entretenimento Brasil LTDA.
  • StoryBots
Websitewww.netflix.com
Alexa rank 21 (January 2020[update])[11]
RegistrationRequired
Users154 million worldwide (total),
148 million (paid)[12]

Netflix, Inc. () is an American media-services provider and production company headquartered in Los Gatos, California, founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California.

The company's primary business is its subscription-based streaming service which offers online streaming of a library of films and television programs, including those produced in-house.[13] As of April 2019, Netflix had over 148 million paid subscriptions worldwide, including 60 million in the United States, and over 154 million subscriptions total including free trials.[12] It is available worldwide except in mainland China (due to local restrictions), Syria, North Korea, and Crimea (due to US sanctions).

The company also has offices in the Netherlands, Brazil, India, Japan, and South Korea.[14] Netflix is a member of the Motion Picture Association (MPA).

Netflix's initial business model included DVD sales and rental by mail, but Hastings abandoned the sales about a year after the company's founding to focus on the initial DVD rental business.[13][15] Netflix expanded its business in 2010 with the introduction of streaming media while retaining the DVD and Blu-ray rental business.

The company expanded internationally in 2010 with streaming available in Canada,[16] followed by Latin America and the Caribbean. Netflix entered the content-production industry in 2012, debuting its first series Lilyhammer.

Since 2012, Netflix has taken more of an active role as producer and distributor for both film and television series, and to that end, it offers a variety of "Netflix Original" content through its online library.[17] By January 2016, Netflix services operated in more than 190 countries.[18] Netflix released an estimated 126 original series and films in 2016, more than any other network or cable channel.[19] Their efforts to produce new content, secure the rights for additional content, and diversify through 190 countries have resulted in the company racking up billions in debt: $21.9 billion as of September 2017, up from $16.8 billion from the previous year.[20] $6.5 billion of this is long-term debt, while the remaining is in long-term obligations.[21] In October 2018, Netflix announced it would raise another $2 billion in debt to help fund new content.[22]

History[edit]

Further information: Timeline of Netflix

See also: Technical details of Netflix

Establishment[edit]

Netflix was founded on August 29, 1997, in Scotts Valley, California, by Marc Randolph[25][26] and Reed Hastings.

Randolph worked as a marketing director for Hastings' company, Pure Atria.[27] Randolph was a co-founder of MicroWarehouse, a computer mail order company, and was later employed by Borland International as vice president of marketing.

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Hastings, a computer scientist and mathematician, sold Pure Atria to Rational Software Corporation in 1997 for $700 million in what was then the biggest acquisition in Silicon Valley history. They came up with the idea for Netflix while commuting between their homes in Santa Cruz and Pure Atria's headquarters in Sunnyvale while waiting for government regulators to approve the merger,[28] although Hasting has given several different explanations for how the idea was created.[29]

Hastings invested $2.5 million in startup cash for Netflix.[30][15] Randolph admired the fledgling e-commerce company Amazon and wanted to find a large category of portable items to sell over the Internet using a similar model.

They considered and rejected VHS tapes as too expensive to stock and too delicate to ship. When they heard about DVDs, which were first introduced in the United States on March 31, 1997,[31] they tested the concept of selling or renting DVDs by mail, by mailing a compact disc to Hastings' house in Santa Cruz.

To Fund Original Content More and More, Netflix Raises $2 Billion In Debt

When the disc arrived intact, they decided to take on the $16 billion home video sales and rental industry.[28] 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 this is an apocryphal story that he and Randolph designed to explain the company's business model and motivation.[28]

Netflix was launched on April 14, 1998, as the world's first online DVD rental store,[28][32] with only 30 employees and 925 titles available, which was almost the entire catalogue of DVDs in print at the time,[33] through the pay-per-rent model with rates and due dates that were similar to its bricks-and-mortar rival, Blockbuster.[34][28]

Membership fee, Blockbuster acquisition offer, growth start[edit]

Netflix introduced the monthly subscription concept in September 1999,[35] and then dropped the single-rental model in early 2000.

Since that time (see Technical details of Netflix), the company has built its reputation on the business model of flat-fee unlimited rentals without due dates, late fees, shipping and handling fees, or per-title rental fees.[36]

In 2000, when Netflix had just about 300,000 subscribers and relied on the U.S. Postal Service for the delivery of their DVDs, they were losing money and offered to be acquired by Blockbuster for $50 million.

They proposed that Netflix, which would be renamed as Blockbuster.com, would handle the online business, while Blockbuster would take care of the DVDs, making them less dependent on the U.S. Postal Service. The offer was declined.[37][38]

While they experienced fast growth in early 2001, both the dot-com bubble burst and the September 11 attacks would occur later that year, affecting the company badly and forcing them to lay off one-third of their 120 employees.

Netflix funding prioir to ipo

However, sales of DVD players finally took off as they became more affordable, selling for about $200 around Thanksgiving time, becoming one of that year's most popular Christmas gifts. By early 2002, Netflix saw a huge increase in their subscription business.[39][40]

Netflix initiated an initial public offering (IPO) on May 29, 2002, selling 5.5 million shares of common stock at the price of US$15.00 per share.

On June 14, 2002, the company sold an additional 825,000 shares of common stock at the same price. After incurring substantial losses during its first few years, Netflix posted its first profit during fiscal year 2003, earning US$6.5 million profit on revenues of US$272 million.

In 2005, 35,000 different films were available, and Netflix shipped 1 million DVDs out every day.[41]

Randolph, a dominant producer and board member for Netflix, retired from the company in 2004.[42]

Netflix was sued in 2004 for false advertising in relation to claims of "unlimited rentals" with "one-day delivery".[43]

Video on demand introduction, declining DVD sales, global expansion[edit]

For some time, the company had 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, they had acquired movie rights and designed the box and service, and were ready to go public with it.

But after discovering YouTube, and witnessing how popular streaming services were despite the lack of high-definition content, the concept of using a hardware device was scrapped and replaced with a streaming concept instead, a project that was completed in 2007.[44]

Netflix developed and maintains an extensive personalized video-recommendation system based on ratings and reviews by its customers.

On October 1, 2006, Netflix offered a $1,000,000 prize to the first developer of a video-recommendation algorithm that could beat its existing algorithm Cinematch, at predicting customer ratings by more than 10%.[45]

In February 2007, the company delivered its billionth DVD,[46] and began to move away from its original core business model of DVDs, by introducing video on demand via the Internet.

Netflix grew as DVD sales fell from 2006 to 2011.[47][48]

Another contributing factor for the company's online DVD rental success was that they could offer a much larger selection of movie titles to choose from than Blockbuster's rental outlets. But when they started to offer streaming content for free to its subscribers in 2007, it could offer no more than about 1000 movies and TV-shows, just 1% compared to its more than 100,000 different DVD titles.

Yet as the popularity kept growing, the number of titles available for streaming was increasing as well and had reached 12,000 movies and shows in June 2009.

One of the key things about Netflix was that it had a recommendation system known as cinematch, which not only got viewers to remain attached to the service, by creating a switching cost, but it also brought out those movies which were underrated so that customers could view those movies too from their recommendations. This was an attribute that not only benefited Netflix but also benefited its viewers and those studios which were minor compared to others.[49]

In January 2013, Netflix reported that it had added two million United States customers during the fourth quarter of 2012, with a total of 27.1 million United States streaming customers, and 29.4 million total streaming customers.

In addition, revenue was up 8% to $945 million for the same period.[50][51] That number increased to 36.3 million subscribers (29.2 million in the United States) in April 2013.[52] As of September 2013, for that year's third quarter report, Netflix reported its total of global streaming subscribers at 40.4 million (31.2 million in the United States).[53] By the fourth quarter of 2013, Netflix reported 33.1 million United States subscribers.[54] By September 2014, Netflix had subscribers in over 40 countries, with intentions of expanding their services in unreached countries.[55] By October 2018, Netflix's customer base reached 137 million worldwide, confirming its rank as by far the world's biggest online subscription video service.[56]

Early Netflix Original content[edit]

Netflix has played a prominent role in independent film distribution.

Through its division Red Envelope Entertainment, Netflix licensed and distributed independent films such as Born into Brothels and Sherrybaby. As of late 2006, Red Envelope Entertainment also expanded into producing original content with filmmakers such as John Waters.[57] Netflix closed Red Envelope Entertainment in 2008, in part to avoid competition with its studio partners.[58][59]

Entertainment dominance, presence, and continued growth[edit]

Netflix has been one of the most successful dot-com ventures.

In September 2002, The New York Times reported that, at the time, Netflix mailed about 190,000 discs per day to its 670,000 monthly subscribers.[60] The company's published subscriber count increased from one million in the fourth quarter of 2002 to around 5.6 million at the end of the third quarter of 2006, to 14 million in March 2010.

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Netflix's early growth was fueled by the fast spread of DVD players in households; in 2004, nearly two-thirds of United States homes had a DVD player. Netflix capitalized on the success of the DVD and its rapid expansion into United States homes, integrating the potential of the Internet and e-commerce to provide services and catalogs that bricks-and-mortar retailers could not compete with.

Netflix funding prioir to ipo

Netflix also operates an online affiliate program which has helped to build online sales for DVD rentals as well. The company offers unlimited vacation time for salaried workers and allows employees to take any amount of their paychecks in stock options.[61]

By 2010, Netflix's streaming business had grown so quickly that within months the company had shifted from the fastest-growing customer of the United States Postal Service's first-class service to the largest source of Internet streaming traffic in North America in the evening.

In November, it began offering a standalone streaming service separate from DVD rentals.[62] 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.[63][64][65] Andy Rendich, a 12-year Netflix veteran, was to be CEO of Qwikster.

Netflix funding prioir to ipo

Qwikster would carry video games whereas Netflix did not.[66] However, in October 2011, Netflix announced that it would retain its DVD service under the name Netflix and would not, in fact, create Qwikster for that purpose.[67]

In April 2011, Netflix had over 23 million subscribers in the United States and over 26 million worldwide.[68] In July 2011, Netflix changed its prices, charging customers for its mail rental service and streaming service separately.

This meant a price increase for customers who wanted to continue receiving both services.[69] On October 24, Netflix announced 800,000 unsubscribers in the United States during the third quarter of 2011, and more losses were expected in the fourth quarter of 2011. However Netflix's income jumped 63% for the third quarter of 2011.[70][71] Year-long, the total digital revenue for Netflix reached at least $1.5 billion.[72] On January 26, 2012, Netflix added 610,000 subscribers in the United States by the end of the fourth quarter of 2011, totaling 24.4 million United States subscribers for this time period.[73] On October 23, however, Netflix announced an 88% decline in profits for the third quarter of the year.[74]

In April 2012, Netflix filed with the Federal Election Commission (FEC) to form a political action committee (PAC) called FLIXPAC.[75]Politico referred to the PAC, based in Los Gatos, California, as "another political tool with which to aggressively press a pro-intellectual property, anti-video-piracy agenda".[75] The hacktivist group Anonymous called for a boycott of Netflix following the news.[76] Netflix spokesperson Joris Evers indicated that the PAC was not set up to support the Stop Online Piracy Act (SOPA) and the PROTECT IP Act (PIPA), tweeting that the intent was to "engage on issues like net neutrality, bandwidth caps, UBB and VPPA".[77][78]

In February 2013, Netflix announced it would be hosting its own awards ceremony, The Flixies.[79] On March 13, 2013, Netflix announced a Facebook implementation, letting United States subscribers access "Watched by your friends" and "Friends' Favorites" by agreeing.[80] This was not legal until the Video Privacy Protection Act of 1988 was modified in early 2013.[81]

Rebranding and wider international expansion[edit]

In April 2014, Netflix approached 50 million global subscribers with a 32.3% video streaming market share in the United States.

Netflix funding prioir to ipo

Netflix operated in 41 countries around the world.[82] In June 2014, Netflix unveiled a global rebranding: a new logo, which uses a modern typeface with the drop shadowing removed, and a new website UI. The change was controversial; some liked the new minimalist design, whereas others felt more comfortable with the old interface.[83] In July 2014, Netflix surpassed 50 million global subscribers, with 36 million of them being in the United States.[84]

Following the launch of Daredevil in April 2015, Netflix director of content operations Tracy Wright announced that Netflix had added support for audio description (a narration track that contains aural descriptions of key visual elements for the blind or visually impaired), and had begun to work with its partners to add descriptions to its other original series over time.[85][86] The following year, as part of a settlement with the American Council of the Blind, Netflix agreed to provide descriptions for its original series within 30 days of their premiere, and add screen reader support and the ability to browse content by availability of descriptions.[87]

At the 2016 Consumer Electronics Show, Netflix announced a major international expansion of its service into 150 additional countries.

Netflix promoted that with this expansion, it would now operate in nearly all countries that the company may legally or logistically operate in. A notable exception was China, citing the barriers of operating Internet and media services in the country due to its regulatory climate. Reed Hastings stated that the company was planning to build relationships with local media companies that could serve as partners for distributing its content in the country (with a goal to concentrate primarily on its original content), but stated that they were in no hurry, and could thus take "many years".[88][89][90][91][92][93][94]

Also in January 2016, Netflix announced it would begin blockingvirtual private networks, or VPNs.[95] At the same time, Netflix reported 74.8 million subscribers and predicted it would add 6.1 million more by March 2016.

Subscription growth has been fueled by its global expansion.[96] By the end of the year, Netflix added a feature to allow customers to download and play select movies and shows while offline.[97]

In February 2017, Netflix signed a music publishing deal with BMG Rights Management, where BMG will oversee rights outside of the United States for music associated with Netflix original content.

Netflix continues to handle these tasks in-house in the United States.[98] On April 17, 2017, it was reported that Netflix was nearing 100 million subscribers.[99] On April 25, 2017, Netflix announced that it had reached a licensing deal in China with the Baidu-owned streaming service iQiyi, to allow selected Netflix original content to be distributed in China on the platform.[89] The Los Angeles Times stated: "Its series and movies account for more than a third of all prime-time download Internet traffic in North America."[100]

On August 7, 2017, Netflix acquired Millarworld, the creator-owned publishing company of comic book writer Mark Millar.

It is the first ever company acquisition in Netflix's history. Netflix plans to leverage Millar and his current and future work for future original content. Chief content officer Ted Sarandos described Millar as being a "modern-day Stan Lee".[101] The following week, Netflix announced that it had entered into an exclusive development deal with Shonda Rhimes.[102]

On January 22, 2018, the company crossed $100 billion in market capitalization, becoming the largest digital media and entertainment company in the world, bigger than every traditional media company except for AT&T, Comcast and Disney[103][104] and the 59th largest publicly traded company in the US S&P 500 Index.[105]

On March 2, 2018, Netflix stock price surged to new all-time high of $301.05 beating its 12-month price target of $300.00, and finishing the session with a market capitalization of $130 billion putting it within shouting distance of traditional media giants like Disney ($155 billion) and Comcast ($169 billion).

The milestone came a day after British satcaster Sky announced a new agreement with Netflix to integrate Netflix's subscription VOD offering into its pay-TV service. Customers with its high-end Sky Q set-top box and service will be able to see Netflix titles alongside their regular Sky channels.[106]

On August 16, 2018, Netflix announced a three-year overall deal with black-ish creator Kenya Barris.

Under the deal, Barris will produce new series exclusively at Netflix, writing and executive producing all projects through his production company, Khalabo Ink Society.[107]

On August 27, 2018, Netflix signed a five-year exclusive overall deal with international best–selling author Harlan Coben. Under the multi-million pact, Netflix will work with Coben to develop 14 existing titles and future projects.[108] On the same day, the company inked an overall deal with Gravity Falls creator Alex Hirsch.[109]

According to Global Internet Phenomena Report Netflix consumes 15% of all Internet bandwidth globally, the most by any single application.[110]

In October 2018, Netflix acquired ABQ Studios, a film and TV production facility with eight sound stages in Albuquerque, New Mexico.

The reported purchase price is under $30 million.[111]

In November 2018, Paramount Pictures signed a multi-picture film deal with Netflix as part of Viacom's growth strategy, making Paramount the first major film studio to sign a deal with Netflix.[112] A sequel to Awesomeness Films' To All the Boys I've Loved Before is currently in development at the studio for Netflix.[113]

Netflix sought and was approved for membership into the Motion Picture Association of America (MPAA) on January 22, 2019, as the first streaming service to become a member of the association.[114]

In May 2019, Netflix acquired the StoryBots children's media franchise as part of a commitment to expand its educational content.[115]

On May 9, 2019, Netflix made a deal with Dark Horse Entertainment to make television series and films based on comics from Dark Horse Comics.[116]

In early August 2019, Netflix negotiated an exclusive multi-year film and television deal with Game of Thrones showrunners David Benioff and D.B.

Netflix funding prioir to ipo

Weiss reportedly worth US$200 million.[117][118] As a result of their commitments to Netflix, Benioff and Weiss withdrew from an earlier agreement with Disney to write and produce a Star Wars film series.[119][120][121]

On November 13, 2019, Netflix and Nickelodeon entered into a multiyear content production agreement to produce several original animated feature films and television series based on Nickelodeon's library of characters, in order to compete with Disney's new streaming service Disney+.

This agreement expanded on their existing relationship, in which new specials based on the past Nickelodeon series Invader Zim and Rocko's Modern Life were released by Netflix. New projects planned under the team-up include a music project featuring Squidward Tentacles from the animated television series SpongeBob SquarePants, and specials based on The Loud House and Rise of the Teenage Mutant Ninja Turtles.[122][123][124]

Ownership[edit]

As of 2017, Netflix shares were mainly held by institutional investors, including Capital Group Companies, The Vanguard Group, BlackRock and others.[125]

Finance[edit]

For the fiscal year 2018, Netflix reported earnings of US$1.21 billion, with an annual revenue of US$15.8 billion, an increase of approximately 116% over the previous fiscal cycle.

Netflix's shares traded at over $400 per share at its highest price in 2018, and its market capitalization reached a value of over US$180 billion in June 2018.

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Netflix ranked 261 on the 2018 Fortune 500 list of the largest United States companies by revenue.[126] Netflix was announced to be the number one best stock in the 2010s, with a total return of 3,693%.[127]

Year Revenue
in mil.

USD-$

Net income
in mil. USD-$
Price per Share
in USD-$
Employees
2005 682 42 2.59
2006 997 49 3.69
2007 1,205 67 3.12
2008 1,365 83 4.09
2009 1,670 116 6.32
2010 2,163 161 16.82 2,180
2011 3,205 226 27.49 2,348
2012 3,609 17 11.86 2,045
2013 4,375 112 35.27 2,022
2014 5,505 267 57.49 2,450
2015 6,780 123 91.90 3,700
2016 8,831 187 102.03 4,700
2017 11,693 559 165.37 5,500
2018 15,794 1,211 7,100

Services[edit]

Netflix's video on demand streaming service, formerly branded as Watch Now, allows subscribers to stream television series and films via the Netflix website on personal computers, or the Netflix software on a variety of supported platforms, including smartphones and tablets, digital media players, video game consoles and smart TVs.[128] According to a Nielsen survey in July 2011, 42% of Netflix users used a standalone computer, 25% used the Wii, 14% by connecting computers to a television, 13% with a PlayStation 3 and 12% an Xbox 360.[129]

When the streaming service first launched, Netflix's disc rental subscribers were given access at no additional charge.

Subscribers were allowed approximately one hour of streaming per dollar spent on the monthly subscription (a $16.99 plan, for example, entitled the subscriber to 17 hours of streaming media).

In January 2008, however, Netflix lifted this restriction, at which point virtually all rental-disc subscribers became entitled to unlimited streaming at no additional cost (however, subscribers on the restricted plan of two DVDs per month ($4.99) remained limited to two hours of streaming per month).

This change came in a response to the introduction of Hulu and to Apple's new video-rental services.[130] Netflix later split DVD rental subscriptions and streaming subscriptions into separate, standalone services, at which point the monthly caps on Internet streaming were lifted.[131]

Netflix service plans are currently divided into three price tiers; the lowest offers standard definition streaming on a single device, the second allows high definition streaming on two devices simultaneously, and the "Platinum" tier allows simultaneous streaming on up to four devices, and 4K streaming on supported devices and Internet connections.

The HD subscription plan historically cost US$7.99; in April 2014, Netflix announced that it would raise the price of this plan to $9.99 for new subscribers, but that existing customers would be grandfathered under this older price until May 2016, after which they could downgrade to the SD-only tier at the same price, or pay the higher fee for continued high definition access.[132][133][134]

In July 2016, a Netflix subscriber sued the company over the price increases, alleging he was told by a Netflix customer support representative in 2011 that they would pay the same price in perpetuity as long as they maintained their subscription continuously.[135]

On November 30, 2016, Netflix launched an offline playback feature, allowing users of the Netflix mobile apps on Android or iOS to cache content on their devices in standard or high quality for viewing without an Internet connection.

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The feature is primarily available on selected series and films, and Netflix stated that more content would be supported by the feature over time.[136][137][138] Netflix will partner with airlines to provide them with its mobile streaming technology. This will start in early 2018 as part of an effort to get airlines to provide better in-flight Wi-Fi.[139]

In 2018, Netflix introduced the "Skip Intro" feature which allows customers to skip the intros to shows on its platform.

They do so through a variety of techniques including manual reviewing, audio tagging, and machine learning.[140][unreliable source?]

History[edit]

On October 1, 2008, Netflix announced a partnership with Starz to bring 2,500+ new films and shows to "Watch Instantly", under Starz Play.[141]

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.[142]

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.[143] The cost for streaming would be $7.99 per month, while DVD rental would start at the same price.

15 years after IPO, Netflix has changed drastically—and is worth nearly 22,000% more

The announcement led to panned reception amongst Netflix's Facebook followers, who posted negative comments on its wall.[144] Twitter comments spiked a negative "Dear Netflix" trend.[144] The company defended its decision during its initial announcement of the change:

"Given the long life we think DVDs by mail will have, treating DVDs as a $2 add-on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs.

Creating an unlimited-DVDs-by-mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs-by-mail offering."[143]

In a reversal, Netflix announced in October that its streaming and DVD-rental plans would remain branded together.[145]

In January 2018, Netflix named Spencer Neumann as the new CFO.[146]

Disc rental[edit]

In the United States, the company provides a monthly flat-fee for DVD and Blu-ray rentals.

A subscriber creates a rental queue, a list, of films to rent. The films are delivered individually via the United States Postal Service from regional warehouses. As of March 28, 2011, Netflix had 58 shipping locations throughout the United States.[147] The subscriber can keep the rented disc as long as desired, but there is a limit on the number of discs that each subscriber can have simultaneously via different tiers.

To rent a new disc, the subscriber must return the previous disc in a metered reply mail envelope.

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Upon receipt, Netflix ships the next available disc in the subscriber's rental queue.

Netflix offers pricing tiers for DVD rental. On November 21, 2008, Netflix began offering subscribers rentals on Blu-ray disc for an additional fee.

In addition, Netflix sold used discs, delivered and billed identically as rentals.

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This service was discontinued at the end of November.[148]

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 and 20th Century Fox were reached on April 9.[149][150][151] In 2011, Netflix split its service pricing.

Currently, Netflix's disc rental memberships range from $7.99 to $19.99/m, including a free one-month trial and unlimited DVD exchanges.

On September 18, 2011, Netflix announced that it would split out and rebrand its DVD-by-mail service as Qwikster. CEO Reed Hastings justified the decision, stating that "we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently." It was also announced that the re-branded service would add video game rentals.

The decision to split the services was widely criticized; it was noted that the two websites would have been autonomous from each other (with ratings, reviews, and queues not carrying over between them), and would have required separate user accounts.

Streaming Platform Iflix, Rival To Netflix In Emerging Markets, Raises $50M+ Ahead Of Potential IPO

Also, the two websites would require separate subscriptions.[152][153][154][155]

On October 10, 2011, Netflix announced that it had shelved the planned re-branding in response to customer feedback and after the stock price plummeted nearly 30%, and that the DVD-by-mail and streaming services would continue to operate through a single website under the Netflix brand.

Netflix stated that it had lost 800,000 subscribers in the fourth quarter of 2011—a loss partially credited to the poor reception of the aborted re-branding.[154][155][156]

In March 2012, Netflix confirmed to TechCrunch that it had acquired the domain name DVD.com.

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By 2016, Netflix had quietly rebranded its DVD-by-mail service under the name DVD.com, A Netflix Company.[157][158][159]

As of 2017, the service still had 3.3 million customers, and Hastings stated plans to keep it for at least five more years.[160] In the first quarter of 2018, DVD rentals earned $60.2 million in profit from $120.4 million in revenue.[161]

Profiles[edit]

In June 2008, Netflix announced plans to eliminate its online subscriber profile feature.[162] Profiles allow one subscriber account to contain multiple users (for example, a couple, two roommates, or parent and child) with separate DVD queues, ratings, recommendations, friend lists, reviews, and intra-site communications for each.

Netflix contended that elimination of profiles would improve the customer experience.[163] However, likely as a result of negative reviews and reaction by Netflix users,[164][165][166] Netflix reversed its decision to remove profiles 11 days after the announcement.[167] In announcing the reinstatement of profiles, Netflix defended its original decision, stating, "Because of an ongoing desire to make our website easier to use, we believed taking a feature away that is only used by a very small minority would help us improve the site for everyone," then explained its reversal: "Listening to our members, we realized that users of this feature often describe it as an essential part of their Netflix experience.

Netflix funding prioir to ipo

Simplicity is only one virtue and it can certainly be outweighed by utility."[168]

Reintroduction[edit]

Netflix reinvigorated the "Profiles" feature on August 1, 2013, that permits accounts to accommodate up to five user profiles, associated either with individuals or thematic occasions.

"Profiles" effectively divides the interest of each user, so that each will receive individualized suggestions and adding favorites individually.

"This is important", according to Todd Yellin, Netflix's Vice President of Product Innovation, because, "About 75 percent to 80 percent of what people watch on Netflix comes from what Netflix recommends, not from what people search for".[169] Moreover, Mike McGuire, a VP at Gartner, said: "profiles will give Netflix even more detailed information about its subscribers and their viewing habits, allowing the company to make better decisions about what movies and TV shows to offer".[170] Additionally, profiles lets users link their individual Facebook accounts, and thus share individual watch queues and recommendations,[170][171] since its addition in March after lobbying Congress to change an outdated act.[171] Neil Hunt, Netflix's former Chief Product Officer, told CNNMoney: "profiles are another way to stand out in the crowded streaming-video space", and, "The company said focus-group testing showed that profiles generate more viewing and more engagement".[172]

Hunt says Netflix may link profiles to specific devices, in time, so a subscriber can skip the step of launching a specific profile each time s/he logs into Netflix on a given device.[173]

Critics of the feature have noted:

  • New profiles are created as "blank slates",[173] but viewing history prior to profile creations stays profile-wide.[174]
  • People don't always watch Netflix alone, and media watched with viewing partner(s) – whose tastes might not reflect the owner(s) – affect recommendations made to that profile.[172][173][174]

In response to both concerns, however, users can refine future recommendations for a given profile by rating the shows watched and by their ongoing viewing habits.[173][174]

Subsidiaries[edit]

  • DVD.com – Rents DVDs by mail
  • Millarworld – A comic book company that was founded in 2004 by Scottishcomic book writer Mark Millar as a creator-owned line.
  • Netflix Pte.

    Funding Rounds

    Ltd. – Netflix's studio in Singapore.

  • Netflix Services UK Limited – A British division that holds Private limited with Share Capital.
  • Netflix Streaming Services International B.V. – A Netflix subsidiary in the Netherlands.
  • Netflix Streaming Services, Inc.

    – A subsidiary that license and streams all of Netflix's films and shows.

  • Netflix Global, LLC – A Foreign Limited-Liability Company filed on August 3, 2016, that co-produces all foreign programming and films
  • Netflix Studios – A film and television studio that co-produces any original or foreign content.[175]
  • Netflix Services Germany GmbH – A studio that contributes to German film subsidies supporting domestic movie and TV production in the country.
  • NetflixCS, Inc.

    – Another located 1108 E SOUTH UNION AVE Midvale, UT 84047.

  • Netflix Luxembourg S.a r.l. – A subsidiary located in Luxembourg, Europe.

Products[edit]

In 2007, Netflix recruited one of the early DVR business pioneers Anthony Wood to build a "Netflix Player" that would allow streaming content to be played directly on a television set rather than a PC or laptop.[176] 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.[177] Wood eventually launched the player as the first device from Roku Inc.

which is now primarily known for its streaming video players, with Netflix serving as a primary investor in the new company.[178]

In 2011, Netflix introduced a Netflix button for certain remote controls, allowing users to instantly access Netflix on compatible devices.[179]

Netflix revealed a prototype of the new device called "The Switch" at the 2015 World Maker Faire New York.

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"The Switch" allows Netflix users to turn off lights when connected to a smart home light system. It also connects to users' local networks to enable their servers to order takeout, and silence one's phone at the press of a button. Though the device hasn't been patented, Netflix released instructions on their website, on how to build it at home (DIY).

The instructions cover both the electrical structure and the programming processes.[180][181]

Since 2015, the company received significant technical support from France's CNRS concerning video compression and formating, through CNRS' Laboratoire des Sciences du Numérique de Nantes (LS2N).

In March 2017 at Barcelona's World Congress for mobile technologies, the American company presented the French lab's open-source technological creation: a compression tool allowing HD+ video quality with a bandwidth need of under 100 kilo octets per second, 40 times less than that of HD TV needs and compatible with mobile services worldwide.[182]

In May 2016, Netflix created a new tool called FAST to determine the speed of an Internet connection.[183]

Content[edit]

Original programming[edit]

Netflix's longtime Los Gatos headquarters location and current legal address at 100 Winchester Circle (Building A)

Netflix's Los Gatos headquarters expansion campus at 90 to 160 Albright Way (Building G, 101 Albright Way).[23][24]

First logo, used from 1997 to 2000

Netflix logo used from 2000 to 2014

Opened Netflix rental envelope containing a DVD of Coach Carter
Marc Randolph, co-founder of Netflix and the first CEO of the company
Reed Hastings, co-founder and the current chairman and CEO