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Netflix and Chill- Part I

What’s going on bro.?  Nothing much…just Netflix and chill.

Isn’t this us most of the time.? Netflix is now part of our life as much as the smartphone. It takes special care of our interests making us prisoners of our own pleasures. We spend hours glued to the screens, binging on our favorite shows, but do we know how it is really working.

How is Netflix managing to captivate millions of subscribers and how did it all start.? If apart from binging the shows you hold that intrigue you are going to learn a lot today

Netflix is an American Media service provider and production company headquartered in Los Gatos, California, founded in 1997 by Reed Hastings and Marc Randolph in Scott valley, California. Its Logo is shown in the image and it’s tagline is: See What’s Next

The Idea of Netflix is a much talked about subject. There is an apocryphal(doubtful authenticity) story that Reed Hasting was fined $40 for returning a movie late to the Blockbuster store and at that point he decided to set up his own business for renting out movies. But as per the book by Marc Randolph “ That Will Never Work” this is only somewhat true. Yes, Reed was fined but the idea took many failed efforts before blooming. As per Marc:

Origin stories often hinge on epiphanies. The stories told to skeptical investors or general public usually highlights a specific moment: the moment it all became clear: Brian Chesky and Joe Gebbie can’t afford their San Francisco rent, then realize that they can blow up an air mattress and charge people to sleep on it- That’s Airbnb. Travis Kalanick spends $800 on a private driver on New Year’s Eve and thinks there has to be a cheaper way- that’s Uber.

Truth is : distrust epiphanies.

The best ideas rarely come on a mountaintop in a flash of lightning. They don’t even come to you on the side of the mountain, when you are stuck in traffic behind a sand truck. They make themselves apparent more slowly, gradually, over weeks and months. And in fact, when you finally have one, you might not realize it for a long time.

Marc Rudolph

Marc explains in his book how he use to keep an idea diary with him everywhere he went to jot down ideas, if anything at any point struck his mind. He always wanted his own business and with Reed he worked hard on brainstorming ideas nearly every day. He mentions how he used to get up in the middle of the night if he thought of any interesting idea that can be implemented and impatiently used to call Reed, to be mostly turned down. His initial ideas included personalized shampoo, computerized baseball bat, dog food and so on.

One night while coaxing his 3 year old child he thought of the Aladdin VHS tape they had for their children. Next day with his team he started thinking of renting the VHS tapes all over the country, He took help from his two friends Te and Christina to analyze the idea before presenting it to Reed. There were many discouraging factors: The VHS tape was bulky and could be easily rented out in any store. It was also highly doubtful if people would return these tapes. He wanted to follow Amazon:

We need a product that already exists in the World,” I said. “But that we can help people access online. Bezos did it with books. You don’t have to write a book to sell them.

Marc Rudolph

But they were having a hard time with the idea. They started looking for alternatives. CD (Compact disc) was much lighter and smaller than VHS tapes but after a lot more digging they found a more affordable alternative that is the DVD . It would have required cheaper inventory and cheaper shipping. Back in 1997 when there were no websites, analytics, cloud or other designing tools, it was very hard to sell your idea to the investor since you couldn’t prove the favorability neither could provide any calculated analysis. However Reed became the angel investor and very much believed in the idea.

Netflix was thus launched as the world’s first online DVD rental store, with only 30 employees and 925 titles available, which was almost the entire catalogue of DVDs in print at the time. In 2000 Netflix offered to be acquired by Blockbuster [an American-based provider of home movie and video game rental services] for $50 million since it was losing money, being heavily dependent on U.S. Postal Service for the delivery of their DVDs. But luckily Blockbuster, at that time declined the offer. Fortunately Netflix paced up while sadly Blockbuster became disfunctional in 2014. As of April 2020 Netflix has over 182 million paid subscription worldwide with a revenue of $20.156 billion[2019].

The contents here are referenced from Marc Randolph’s book: That Will Never Work. Read through the book to discover the complete journey of this amazing idea. This article will be continued in Part II to unfold the mystery of Netflix popularity.

2 Comments »

    • Well said, the future of entertainment is surely digital and you will be glad to know how Netflix works to create it. Wait up for part – II to became even a bigger fan of Netflix 😉 Have a Good time reading.

      Liked by 2 people

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