Netflix 's Effect On The World 's Multi Billion Dollar Empire
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It’s instantly recognized when the familiar red envelope arrives in the mail. The bright red “N” bookmarked on your favorite web browser. You probably have sunk into old episodes of your favorite TV shows. Netflix serves as the model for delivering legitimate video content to the consumer for a reasonable price. Two men from Silicon Valley had an idea in a time where few people knew the existence of DVDs, and slowly rose to power into today’s multi-billion dollar empire. The road to success was far from perfect, as many business decisions caused controversy. From small beginnings Netflix challenged industry powerhouses like Blockbuster and Hollywood Video. Now, Netflix contests the control of network television while working in conjunction…show more content… However, the tale is “a lot of crap”, according to co-founder Marc Randolph1. The myth was created to show the simplicity of Netflix’s business model: order online and return whenever you’re done, no late fees. Their humble beginnings actually began when Randolph and Hastings, while working at software company Pure Atria, were fascinated by direct mail marketing and saw the internet as a channel to cut into the video rental business1. Because VHS tapes were too costly to keep as inventory, they focused on a new technology: DVDs. When Randolph tells the creation story, he argues that the real “aha” moment was when he and Hastings realized that they could mail compact discs through the US Postal Service without damaging the discs1. They began serious work on Netflix in the summer of 1997 after Pure Atria was sold. At the time, the video rental market was dominated by Blockbuster and a handful of other players who were focused entirely on renting VHS titles in brick and mortar stores.
While their business plan called for renting DVDs by mail, the success of the DVD player was a big gamble in 1997. At the time the format was brand new but growing fast, with 400,000 machines sold in the first six months of 19972. The technology faced an uphill battle to unseat the more ubiquitous VHS player. Part of the reason for the technology’s slow adoption was the price; most machines cost