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Nguyen, Phuong


(NasdaqGS: NFLX) - Revolution of the Movie Business

Netflix was founded in 1997 in by Marc Randolph and Reed Hastings. Hastings was inspired to start the company after being charged late fees for return a rented copy of Apllo 13 after the due date. Netflix is considered as the world's first Internet store to offer DVD rentals and online streaming videos.
With more than 16 million members in the United States and Canada, Netflix, Inc. is the world's leading Internet subscription service for enjoying movies and TV shows. For $7.99 a month, Netflix offers its members instantly watch unlimited movies and TV episodes streamed over the Internet and DVD rentals.

TV episodes & movies streamed instantly: (U.S. + Canada)
  • Instantly watch online on your PC or Mac.
  • Instantly watch right on your TV via devices streaming from Netflix.
  • Choose from a growing library of movies & TV episodes.


DVDs by mail: (U.S. only plans starting at $9.99)
  1. Sign up and create your Queue (movie list).
  2. We rush you movies from your Queue.
  3. Watch movies when you want. No due dates, no late fees.
  4. Exchange movies to get new ones from your list.


Unlimited Plans
$7.99 a month: Watch instantly unlimited (no DVDs)
$9.99 a month: Watch instantly unlimited + 1 DVD out at-a-time
$14.99 a month: Watch instantly unlimited + 2 DVDs out at-a-time
$19.99 a month: Watch instantly unlimited + 3 DVDs out at-a-time
$27.99 a month: Watch instantly unlimited + 4 DVDs out at-a-time
$34.99 a month: Watch instantly unlimited + 5 DVDs out at-a-time 
$41.99 a month: Watch instantly unlimited + 6 DVDs out at-a-time
$48.99 a month: Watch instantly unlimited + 7 DVDs out at-a-time
$55.99 a month: Watch instantly unlimited + 8 DVDs out at-a-time
Limited Plans
$4.99 a month: Watch instantly (up to 2 hours a month) on your PC or Mac + 1 DVD out at-a-time (limit 2 rentals a month)
Netflix was establised when Hastings got a late fee, about $40, for Apollo 13, and he was embarrassed about it. That was back in the VHS days, and it got him thinking that there was a big market out there.
Hastings started to investigate the idea of how to create a movie-rental business by mail. He did not know about DVDs. He ran out to Tower Records in Santa Cruz and mailed CDs to himself, just a disc in an envelope. It was a long 24 hours until the mail arrived back at his house. He ripped the mail open and it was in great shape.
The first concept Netflix launched was rental by mail, but it wasn't subscription based. As a result, it worked more like Blockbuster. Hastings started to try the more radical subscription idea and offer a free trial to boost up number of renewals from the free trial to the paid.
Netflix API: On October 1, 2008, Netflix launched an Application Program Interface (API) which allows its members to access to data for all Neflix titles as well as access on a member's account to manage their movie queue. The Netflix API is free and allows commercial use. It has also allowed many developers to release Neflix applications for mobile devices.  
Netflix streams HD content using Microsoft VC1AP encoding at a bit-rate of between 2600kbps and 3800kbps which should provide a better experience for those with lower bandwidths.*
Devices that instantly stream from Netflix:
  • Video Game Consoles (Wii, PS3, & Xbox360)
  • Internet Connected Blu-Ray Players (LG, Samsung, Sony, Insignia, Philips, & Panasonic)
  • Internet Connected HD Televisions (LG, Samsung, Sony, Insignia, & Vizio)
  • Mobile Devices (iPad, iPhone, Windows Phone)
  • Other Devices like TiVo, ROKU
Netflix is consistently ranked as a top web site for consumers. In February 2010, the American Customer Satisfaction Index named Netflix the number one e-commerce company for customer satisfaction.
Netflix stock began trading on the NASDAQ National Market on May 23, 2002 with the per share price offered at $15.00.On January 21, 2004 Netflix announced a 2-for-1 split of common shares. Today, Netflix common stock price has reached around $200.00 per share.
Netflix has more than 16 million members in the United States and Canada and become the world's leading Internet subscription service.

Target a specific niche: When there's an ache, you want to be like aspirin, not vitamins. Aspirin solves a very particular problem someone has, whereas vitamins are a general "nice to have" market. [The Netflix idea] was certainly aspirin.

Stay flexible: We named the company Netflix, not DVDs by Mail because we knew that eventually we would deliver movies directly over the Internet. DVDs will be around a long time, but we're building for the day when they're not.

Never underestimate the competition: We erroneously concluded that Blockbuster, probably wasn't going to launch a competitive effort when they hadn't by 2003. Then, in 2004, they did. We thought, Well, they won't put much money behind it. Over the past four years they've invested more than $500 million against us.

There are no shortcuts: Occasionally great wealth is created in a short amount of time, but it's through a lot of luck in those situations. You just have to think of building an organization as a lot of work. It may or may not turn into great wealth.


    Netflix: Packing DVDs at lightning speed