Netflix investor relations material

The streaming pioneer

Netflix was founded in 1997 by Marc Randolph and Reed Hastings in California. Today, the company is one of the the global leaders within streaming entertainment subscription services with its hundreds of millions of subscribers. Netflix’s extensive library of TV series, documentaries, and feature films is a mix between third party licensed and in-house produced content. Subscribers can watch as much as they want, anytime, anywhere, as long as they have a screen connected to the internet. The bold bet on video streaming was completely revolutionary back in 2007. Netflix is thus considered to be a pioneer within the field.

Bezos tried to acquire Netflix

During the early 2000s, Randolph and Hastings admired Amazon and the exploding e-commerce market, and also wanted to become a digital category market leader. With this as a basis, Netflix was not just a pioneer within streaming. They were also fast to adopt the shift towards DVDs by launching a DVD-by-mail subscription service already in 1999, which still today is more popular than you might think. Another fun fact regarding Netflix’s early days is that Jeff Bezos offered $15 million to acquire the company in 1998, but Hastings who held 70% of the voting rights at the time turned him down.

The crucial business model pivot

When Netflix entered the home-video sale and rental industry back in 1998, it was valued at roughly $16 billion, which is the same amount of revenue they conducted in 2018. The basis for this enormous success is both related to the growing streaming demand and that Netflix was the first company to capture it. It is quite remarkable that an established physically reliant DVD-by-mail player like Netflix would become a pioneer in the digital space. In hindsight, the business model shift towards subscription based streaming has been absolutely crucial. In comparison, Netflix’s toughest competitor in the early days, Blockbuster, did not embrace this shift and filed for bankruptcy in 2010 after years of struggle.

Provider goes producer

Netflix released its first in-house produced drama series House of Cards in early 2013, starring Kevin Spacey, as a bold and expensive bet. The show luckily became an immediate success which resulted in the starting point for Netflix’s new era, in-house content production. The rationale behind producing its own content was that Netflix would otherwise be forced to buy content from other players. And in parallel to the growth of the streaming market, great content would only become more expensive as more players entered the space. Netflix thus created its own competitive advantage through this shift, which has been vital for the company’s success.

Since 2013, Netflix has released lots of major blockbuster hits like Stranger Things, Narcos, The Crown, Bridgerton, Roma, Wednesday, and Squid Game. As of 2021, the company had produced over 2400 original titles and was valued at north of $250 billion during the same year. Given its successes and large market capitalization, Netflix is also a part of the famous FAANG cohort, which other than Netflix consists of Facebook (Meta), Apple, Amazon, and Google (Alphabet).