Prompt Cast
The Evolution and Success of Netflix: From Redbox to Original Content
TLDR Netflix has evolved from a project at Redbox to a wildly profitable standalone company, dominating the streaming industry with 58% of downstream internet traffic. Their success can be attributed to their ability to create content that people love, their strategic investments in content and marketing, and their innovative approach to streaming.
Timestamped Summary
00:00
Netflix accounts for 15% of all internet traffic and 58% of downstream internet traffic in the category of streaming movies and TV.
06:22
Redbox, originally a project at Netflix, is now a wildly profitable standalone company that acquires Disney movies by sending employees to buy retail copies of DVDs and Blu-rays to stock their machines, and they played a major role in destroying Blockbuster.
12:33
Netflix hires Anthony Wood to work on a set-top box called the Netflix box, but later decides to pivot the project into streaming and spins it out as a separate company called Roku.
18:25
Netflix spins off Redbox and Roku as separate companies, with Roku becoming a successful billion-dollar public company, while Netflix focuses on the more challenging and capital-intensive content side of the streaming business.
24:20
Netflix, realizing the future of streaming, signs a $800 million deal with EPIX and starts spending a lot of money on content acquisition, while facing opposition from cable companies who start throttling their service.
30:16
In 2010, Netflix wins the fight for net neutrality and the FCC approves rules preventing ISPs from blocking content, leading to a successful year for Netflix, which continues into 2011 with the launch of international expansion and the invention of the Chaos Monkey.
36:11
In an attempt to address the negative reaction to the price cut, Netflix decides to spin off the DVD rental business into a separate company called Quickster, and releases a viral video on YouTube to explain the strategy, but it backfires and becomes a laughing stock.
41:58
Netflix's value as a company drops by 80% in a couple of months after the announcement of the Quickster spin-off, which is poorly executed and receives negative feedback from customers, leading to the cancellation of Quickster and the departure of the CEO and employees, while Amazon launches its own streaming competitor and strikes a deal with Epix, making 2012 a tough year for Netflix.
47:47
Netflix realizes that people want to binge-watch TV shows rather than watch them on a weekly basis, leading to the creation of original episodic content like "Lilyhammer," "Arrested Development," and "House of Cards."
53:33
Netflix realizes the power of releasing all episodes of a season at once with the success of "House of Cards," leading to a shift in their content acquisition and production strategy, as well as a change in their capital market strategy to raise debt and invest in content.
59:30
Netflix's market cap has surpassed $100 billion, they have nearly 60 million U.S. subscribers, and are projected to generate close to $15 billion in revenue and over $1 billion in net income for 2018.
01:05:55
Netflix's homepage has evolved over the years from a cluttered mess to a simple and streamlined interface, reflecting the company's growth and success in educating consumers about their innovative DVD and streaming models.
01:11:22
Netflix's success can be attributed to their ability to create content that people love and will tell their friends about, as well as their strategy of producing a broad set of shows for a broad audience, which allows them to spread the cost of production across a massive amount of subscribers.
01:17:01
Netflix's growth is driven by a period in their growth curve where customer acquisition costs decrease due to the improved service and increased adoption, and they strategically invest in content and marketing to maintain their 30% year-over-year subscriber growth.
01:23:03
Netflix's decision to split its DVD and streaming services into separate companies with the launch of Quickster was not successful because streaming wasn't clearly better than DVDs at the time, unlike Apple's strategic decisions to remove features like the floppy drive and headphone jack.
Categories:
Technology
Business
