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The Five Steps You Should Take to Grow Your Company

Netflix: How it came to dominate the entertainment world

We are all familiar with Netflix and how it’s one of the most popular streaming sites in the world, but what you might not know is that it’s actually a streaming empire that provides TV shows, films, and documentaries to over 195 million paying members located in 190 countries in order to take the number one spot in television entertainment.

Reed Hastings

CEO and co-founder of Netflix


“He started a delivery system for movies, and now his company is one of the most powerful forces in movies. In the capital of drama, Mr. Hastings is, without drama, ripping out the infrastructure and replacing it with his own.” See more here.

FIVE STEPS TO BECOME #1

Continue reading below to understand how Reed Hastings and the Netflix company grew to become the number one streaming service in the world.

STEP 1:

Be one of the first in the game. Reed Hastings (mentioned above) and Marc Randolph were coworkers at Pure Software in 1997 and came up with an idea to start a mail-in service to compete with Blockbuster. This idea was sparked when Hastings was charged with an overdue rental of Apollo 13. He thought there had to be an easier alternative to a brick-and-mortar rental service, especially since the television industry had not seen significant breakthroughs in decades. This is when he sold Pure Software for $750 million in ’97 and came up with Netflix. This little company worked so that people could rent DVD’s for $4 and there was no late charge, you just couldn’t rent another one without returning the first one. This introduced convenience and ease to the entertainment world. From here, major brick-and-mortar stores like Blockbuster were under serious threat with the new mail-order-rental model. In 2000, Hastings approached Blockbuster about a potential partnership or buyout for $50 million, but was rejected for both offers. Little did they know that when online video streaming would take over television watching in 2007, they would inevitably declare bankruptcy just three years later in 2010. But 2007 was a major year for Netflix. With 7.5 million subscribers and a new idea introduced to the public, everybody seemed to want to get a taste. A year later in 2008, consumer electronics such as video game consoles and Blu-ray disc players fought over the opportunity to get Netflix available for download for users. In 2013, Netflix received 31 primetime Emmy nominations including outstanding drama series, comedy series and documentary or nonfiction special for “House of Cards” and “Orange Is the New Black”.

House of Cards. Netflix started production in 2013. First monumental ownership stream.

STEP 2:

Produce content that people want to see. From 2007-2013, Netflix operated as an intermediary streamer where they would purchase the rights of another producer and stream those items. House of Cards, starring Kevin Spacey, is a thrilling political adaptation of a 1990 miniseries about politicians seeking revenge. It was originally set to be produced by AMC, but Netflix swooped in and outbid them for production rights. It was their first major risk that would cost them $100 million. House of cards was hugely influential in proving the legitimacy of Netflix, showing that is in fact a big player in streaming services that is capable of insurmountable growth…

Orange is the New Black is a show that Netflix produced in 2013. It primarily stars women and is based in a prison community that addresses real-life issues with women’s rights, homosexuality, transsexuality, and racism.

STEP 3:

Keep your friends close, but your coworkers closer. The Netflix work environment was not a friendly one. Employees were strictly there to make Netflix a better company, and if you showed any signs of slowing down or not bringing your absolute best ideas to the table, you would be replaced. It was compared to the NBA, in which if there is a better player more fit to the team, why wouldn’t you hire them? Unlike many companies operating in the US, the workplace was a place of competition. Salaries were through the roof because people didn’t know if they were going to have a job the next day…

STEP 4:

Get everyone to watch your stuff. This starts by having a great content design team. What many Netflix users don’t know is that Netflix’s content design team is superior and is able to get different types of people to watch a similar show. What this means is that they alter the appearance of one show or movie to appeal to a wider set of audiences. Horror and drama watchers can overlap to watch one thriller piece. Romance and suspense watchers can overlap and watch a drama piece. LGBTQ+ and reality watchers can overlap and watch any one of their real-time documentary pieces. This is able to happen because of how the cover photo is presented to certain audiences. Netflix site designers have access to data and pick a certain design to boost the number of shows or movies that you might like, and then are therefore recommended to you.

Image comparison. Money Heist (La Casa de Papel en Espanol) is a suspenseful crime TV show based in Spain. Here you can see the content design strategy used to appeal to different genre watchers. Left: shown to drama/suspense watchers. Right: shown to horror fans. Slide bar to see full comparison.

STEP 5:

Once ahead, stay ahead. If you have a lead in what you are doing, make sure to keep it. Over the last few decades, Netflix has accrued 195 million subscribers and have invested in producing content in multiple languages to be able to stream in 190 countries. In 2018 it peaked at about $400 dollars per share, but as the number of competitors has increased in both quantity and quality, its 2020 stock is just shy of $300 per share. Amazon Prime Video is Netflix’s number one threat at 150 million subscribers worldwide. From 2018 to 2019, Netflix’s revenue grew from $15.8 billion to $20.2 billion to continue its yearly growth.

2020-12-31T11:59:00

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To start and finish The Office

The Office has been streamed by Netflix since 2005 and is still a major hit today. However, NBC’s Peacock is buying the complete rights to stream it for $500 million.