Netflix Can’t Be Stopped

It’s happening more and more all the time. Industries in America are experiencing sweeping  technological changes that not only change the way an industry works, but change people’s everyday lives. Podcasting for radio, DVR for television, Amazon for shopping, to name just a few. But the one that’s had the biggest and most interesting impact by far is Netflix in the film industry.

What started out as a simple mail-order DVD service has become, in my opinion, the best at-home entertainment option. I can’t think of a company that has grown quicker and smoother than Netflix. Started in 1997, then first publically posting revenues for the year 2003 of $272 million. That’s not bad for a 6 year old company. Still chump change compared to their 2009 revenue of $1.67 billion. I bet it’s at least at 2.5 billion now. (All these stats and all following stats are from Wikipedia and/or my brain. And yes, both are reliable sources.)

More impressive than dollars and cents is the market presence and effect on the entire movie industry. Blockbuster had an opportunity to buy Netflix early on. They didn’t, and now they are bankrupt with $900 million in debt, and owned by DirecTV. Part of this is due to Redbox, but I believe Netflix is the real finisher. Redboxes do keep popping up, but the truth is that sooner or later all movie rental will be digital whether it’s a pay-per-view service or monthly subscription online streaming.

And that’s where Netflix turned the corner from a convenient way to get movies to major industry player. You can now stream over 10,000 movies online, and  over 20,000 TV Episodes. With rough estimates, it would take you over 3 years straight to watch everything that is offered on Netflix instant. 20% of the internet bandwidth usage during prime time every night in America is used for Netflix watch instantly.

In my opinion, the reason Netflix is literally on top of the movie industry is it’s wiliness to spend the money to get the shows and movies people want to see. All the technology, customer service, speed, convenience is nothing unless they have the products that people desire. They partnered with Starz in 2008. Last year, they paid $1 billion to stream Paramount, Lions Gate, and MGM for the next 5 years. Add that to the numerous TV and delivery rights with just about everybody, you have a company that knows what the people want (everything) and knows how to get it (money). The first few seasons of the mega hit TV show Mad Men is going to be streaming in July. The price? Nearly $1 million… per episode.

Ready for Netflix to turn the next corner? That. Just. Happened. In March, they reached a deal with a new show from this-year Oscar Nominee director David Fincher and Oscar Winning actor Kevin Spacey called House of Cards to establish their first original streaming program, beating out heavyweights HBO and AMC. That’s right, you don’t have to set your DVR, you don’t have to wait for it to pop on Hulu, you’ll find it instantly, ready to watch, 24/7, ONLY on Netflix… first. Wikipedia has all the juicy details about this huge deal, but one I found most interesting is that Netflix will do absolutely nothing to advertise for it, claiming the only advertising they need is the algorithm that recommends shows to customers based on their watching patterns.

Look for a business model, and you got it in Netflix. Aside from the whole “If you stream it, they will come” method, their employee culture something unheard of. They offer unlimited vacation time for salaried workers, and the option to have any amount of their paycheck in stock. I hope when I apply to work at Netflix in a year or so they see this post… but seriously.

Although technological advances change industries constantly, what Netflix has done in the last 10 years is nothing short of phenomenal. They took the Hollywood and put it in their own hands. It’s not unreal to think that in the next couple years, Netflix will have a whole fleet of original television programming. The only question is… what else will it do?

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One thought on “Netflix Can’t Be Stopped

  1. Nice graph you posted it really shows the increasing dominance Netflix is gaining in the market due to the internet.

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