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Marc Randolph and Reed Hastings founded Netflix on August 29, 1997 in Scotts Valley, California. Randolph worked as a marketing director for Hastings’ company, Pure Atria. Randolph had co-founded MicroWarehouse, a computer mail-order company; Borland International later employed him as vice president of marketing. 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. The two came up with the idea for Netflix when commuting between their homes in Santa Cruz and Pure Atria’s headquarters in Sunnyvale while waiting for government regulators to approve the merger, although Hastings has given several different explanations for how the idea came about.
Hastings invested $2.5 million in startup cash for Netflix. 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. Hastings and Randolph considered and rejected VHS tapes as too expensive to stock and too delicate to ship. When they heard about DVDs, first introduced in the United States on March 24, 1997, they tested the concept of selling or renting DVDs by mail by mailing a compact disc to Hastings’ house in Santa Cruz. When the disc arrived intact, they decided to take on the $16 billion home-video sales and rental industry. 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 he and Randolph designed this apocryphal story to explain the company’s business model and motivation.
Netflix launched as the world’s first online DVD-rental store, with only 30 employees and 925 titles available – almost the entire catalogue of DVDs at the time, – using the pay-per-rent model, with rates and due dates similar to those of its brick-and-mortar competitor, Blockbuster.
Membership fee, Blockbuster acquisition offer, growth startEdit
Netflix introduced the monthly subscription concept in September 1999, 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.
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.
While they experienced fast growth in early 2001, both the dot-com bubble burst and the September 11 attacks occurred later that year, affecting the company badly and forcing them to lay off one-third of their 120 employees. 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.
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 the 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.
Randolph, a dominant producer and board member for Netflix, retired from the company in 2004.
Netflix was sued in 2004 for false advertising in relation to claims of “unlimited rentals” with “one-day delivery”.
Video on demand introduction, declining DVD sales, global expansionEdit
First logo, used from 1997 to 2000
Netflix logo used from 2001 to 2014
Netflix N icon used since 2015
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.
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%.
In February 2007, the company delivered its billionth DVD, 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.
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.
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. That number increased to 36.3 million subscribers (29.2 million in the United States) in April 2013. 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).By the fourth quarter of 2013, Netflix reported 33.1 million United States subscribers.By September 2014, Netflix had subscribers in over 40 countries, with intentions of expanding their services in unreached countries. 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.
Early Netflix Original contentEdit
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. Netflix closed Red Envelope Entertainment in 2008, in part to avoid competition with its studio partners.
Entertainment dominance, presence, and continued growthEdit
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. 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. 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 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.
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. 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. Andy Rendich, a 12-year Netflix veteran, was to be CEO of Qwikster. Qwikster would carry video games whereas Netflix did not. 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.
In April 2011, Netflix had over 23 million subscribers in the United States and over 26 million worldwide. 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. 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. Year-long, the total digital revenue for Netflix reached at least $1.5 billion. 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. On October 23, however, Netflix announced an 88% decline in profits for the third quarter of the year.
Opened Netflix rental envelope containing a DVD of Coach Carter
In April 2012, Netflix filed with the Federal Election Commission (FEC) to form a political action committee (PAC) called FLIXPAC.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”.The hacktivist group Anonymous called for a boycott of Netflix following the news. 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”.
In February 2013, Netflix announced it would be hosting its own awards ceremony, The Flixies. On March 13, 2013, Netflix announced a Facebook implementation, letting United States subscribers access “Watched by your friends” and “Friends’ Favorites” by agreeing. This was not legal until the Video Privacy Protection Act of 1988 was modified in early 2013.
Rebranding and wider international expansionEdit
In April 2014, Netflix approached 50 million global subscribers with a 32.3% video streaming market share in the United States. Netflix operated in 41 countries around the world. 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. In July 2014, Netflix surpassed 50 million global subscribers, with 36 million of them being in the United States.
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. 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.
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”.
Also in January 2016, Netflix announced it would begin blocking virtual private networks, or VPNs. 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. By the end of the year, Netflix added a feature to allow customers to download and play select movies and shows while offline.
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. On April 17, 2017, it was reported that Netflix was nearing 100 million subscribers. 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. 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.”
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”. The following week, Netflix announced that it had entered into an exclusive development deal with Shonda Rhimes and her production company Shondaland.
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 and the 59th largest publicly traded company in the US S&P 500 Index.
On March 2, 2018, Netflix stock price surged to a 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.
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.
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. On the same day, the company inked an overall deal with Gravity Falls creator Alex Hirsch.
According to Global Internet Phenomena Report Netflix consumes 15% of all Internet bandwidth globally, the most by any single application.
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.
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. A sequel to Awesomeness Films’ To All the Boys I’ve Loved Before is currently in development at the studio for Netflix.
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.
In April 2019, it was announced that Netflix was seeking to purchase Grauman’s Egyptian Theatre from the American Cinematheque to use as a special events venue, Later on May 29, 2020, it was announced that Netflix will acquire the theater and invests in some renovations of it.
In May 2019, Netflix acquired the StoryBots children’s media franchise as part of a commitment to expand its educational content.
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.
In July 2019, Netflix announced that it would be opening a hub at Shepperton Studios as part of a deal with Pinewood Group.
In early August 2019, Netflix negotiated an exclusive multi-year film and television deal with Game of Thrones creators/showrunners David Benioff and D.B. Weiss reportedly worth US$200 million. 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.
On November 13, 2019, Netflix and Nickelodeon entered into a multi-year 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+, which had launched the day before. This agreement expanded on their existing relationship, in which new specials based on the past Nickelodeon series Invader Zim and Rocko’s Modern Life (Invader Zim: Enter the Florpus and Rocko’s Modern Life: Static Cling respectively) 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 films based on The Loud House and Rise of the Teenage Mutant Ninja Turtles.
In January 2020, Gloria Sanchez Productions entered a multi-year non exclusive first-look television deal with Netflix, and also entered a feature multi-year deal with Paramount Pictures.
On February 25, 2020, Netflix formed partnerships with six Japanese creators to produce an original Japanese anime project. This partnership include manga creator group CLAMP, mangaka Shin Kibayashi, mangaka Yasuo Ohtagaki, novelist and film director Otsuichi, novelist Tow Ubutaka, and manga creator Mari Yamazaki.
During the COVID-19 lockdown in 2020, Netflix acquired 16 million new subscribers, which almost doubles the result of the final months of 2019.
On April 7, 2020, Chernin Entertainment made a multi-year first look deal with Netflix to make films.
Source : https://en.m.wikipedia.org/wiki/Netflix