Netflix co-founders Reed Hastings and Marc Randolph started out in 1997 with a mail-in DVD rental service based in Silicon Valley. They shipped their DVDs in red envelopes marked with the company logo, and steadily built a customer base by charging fixed monthly payments instead of per rental. Despite fierce market competition, large turnover ratios and adaptive company policies equated to rapid growth, and nearly 10 years later, the company has revolutionized the media streaming industry. Having switched its focus from mail-in to online, the company now offers its subscribers unlimited access to a library of high-definition videos — all for a low monthly fee. They started original productions with the hit TV series “House of Cards,” which brought unprecedented success and raised the company’s stature in the entertainment industry. As a content distributor that was neither a broadcasting company nor an official production studio, it was a risky but revolutionary endeavor.
Netflix has many technical advantages over its competitors, including rapid streaming and buffering technology, a wide range of content, and algorithms that analyze users’ personal preferences. With exclusive release rights for over 10 original productions, the ability to offer unlimited access to content for a fixed monthly rate, and markets that have expanded from North America and Western Europe to nearly every region across the globe, Netflix is redefining what it means to be a “content distributor.” Regarding the changes in content consumption triggered by Netflix’s daring experiments, industry experts say that power has shifted from the distributors to the users.