Netflix

Netflix is an American subscription video on-demand over-the-top streaming service. The service primarily distributes original and acquired films and television shows from various genres, and it is available internationally in multiple languages.

Launched in 2007, nearly a decade after Netflix, Inc. began its pioneering DVD-by-mail movie rental service, Netflix is the most-subscribed video on demand streaming media service, with 301.6 million paid memberships in more than 190 countries as of 2025. By 2022, "Netflix Original" productions accounted for half of its library in the United States and the namesake company had ventured into other categories, such as video game publishing of mobile games through its flagship service. As of 2025, Netflix is the 18th most-visited website in the world, with 21.18% of its traffic coming from the United States, followed by the United Kingdom at 6.01%, Canada at 4.94%, and Brazil at 4.24%.

Netflix was founded by Marc Randolph and Reed Hastings on August 29, 1997, in Scotts Valley, California. Hastings, a computer scientist and mathematician, was a co-founder of Pure Software, which was acquired by Rational Software that year for $750 million, the then-biggest acquisition in Silicon Valley history. Randolph had worked as a marketing director for Pure Software after Pure Atria acquired a company where Randolph worked. He was previously a co-founder of MicroWarehouse, a computer mail-order company, as well as vice president of marketing for Borland.

Hastings and Randolph came up with the idea for Netflix while carpooling between their homes in Santa Cruz, California, and Pure Atria's headquarters in Sunnyvale. Patty McCord, later head of human resources at Netflix, was also in the carpool group. Randolph admired Amazon and wanted to find a large category of portable items to sell over the Internet using a similar model. Hastings and Randolph considered and rejected selling and renting VHS as too expensive to stock and too delicate to ship. When they heard about DVDs, first introduced in the United States in early 1997, they tested the concept of online DVD rental or sales by mail, by mailing a compact disc to Hastings's house in Santa Cruz. When the CD arrived intact, they decided to enter the $16 billion Home-video sales and rental industry. Hastings invested $2.5 million into Netflix from the sale of Pure Atria. Netflix launched as the first DVD rental and sales website with 30 employees and 925 titles available—nearly all DVDs published. Randolph and Hastings met with Jeff Bezos, whose Amazon offered to acquire Netflix for between $14 and $16 million. Fearing competition from Amazon, Randolph thought the offer was fair, but Hastings, who owned 70% of the company, turned it down on the plane ride home.

Not restricted to the size of a retail store, Netflix could offer hundreds of thousands of DVDs to customers in a long tail business model. Early employee Cindy Holland compared the company acquiring DVDs to "shoveling coal in the side door of the house". Initially, Netflix offered a per-rental model for each DVD but introduced a monthly subscription concept in September 1999. The per-rental model was dropped by early 2000, allowing the company to focus on the business model of flat-fee unlimited rentals without due dates, late fees, shipping and handling fees, or per-title rental fees. While customers enjoyed the convenience, more important to Netflix was that it did not have to store or ship those DVDs; subscribers' homes acted as warehouses. The company secretly slowed deliveries to heavy users ("pigs"), to discourage them from quickly returning DVDs.

In September 2000, during the dot-com bubble, while Netflix was suffering losses, Hastings and Randolph offered to sell the company to Blockbuster for $50 million. John Antioco, CEO of Blockbuster, thought the offer was a joke and declined, saying, "The dot-com hysteria is completely overblown." While Netflix experienced fast growth in early 2001, the continued effects of the dot-com bubble collapse and the September 11 attacks caused the company to hold off plans for its initial public offering (IPO) and to lay off one-third of its 120 employees.

DVD players were a popular gift for holiday sales in late 2001, and demand for DVD subscription services were "growing like crazy", according to chief talent officer McCord. The company went public on May 23, 2002, opening on NASDAQ at US$15.00 per share with a sale of 5.5 million shares of common stock. In 2003, Netflix was issued a patent by the United States Patent and Trademark Office to cover its subscription rental service and several extensions. The company posted its first profit in 2003, earning $6.5 million on revenues of $272 million; by 2004, profit had increased to $49 million on over $500 million in revenues. In 2005, 35,000 different films were available, and Netflix shipped 1 million DVDs out every day.

In 2004, Blockbuster introduced a DVD rental service, which not only allowed users to check out titles through online sites but allowed for them to return them at brick and-mortar stores. By 2006, Blockbuster's service reached two million users, and while trailing Netflix's subscriber count, was drawing business away from Netflix. Netflix lowered fees in 2007. While it was an urban legend that Netflix ultimately "killed" Blockbuster in the DVD rental market, Blockbuster's debt load and internal disagreements hurt the company.