What Will Happen to Netflix?^[1]

At the beginning of this module, you learned about the rise and fall of Blockbuster. The competition from Netflix was a huge factor in Blockbuster’s failure. In Netflix’s history and current business model, you can visualize many of the concepts you have just learned about.

When the founders of Netflix, Reed Hastings and Marc Randolph, were co-workers at another company, they brainstormed business ideas while they carpooled to work. Hastings eventually invested money in their new venture and both would contribute labor to run it. When the entrepreneurs founded Netflix in 1997, their output was a rental service and they delivered the goods it was renting, DVDs, by regular postal mail. Customers subscribed to Netflix because they found value in the time savings of having movies delivered to their homes with no added fees for mailing them back late. In 2000, Hastings took a team to Blockbuster and proposed that Blockbuster buy Netflix. Unfortunately for Blockbuster, their management laughed and turned down a great chance to enhance their plan for growth and expand its operations.

As the technological environment changed, more and more people gained access to the internet. In 2007, Netflix began to stream video content with a trial in Canada. By 2010, Netflix decided to change their focus and market themselves as primarily a movie streaming service that also rented DVDs. In the competitive environment at that time, Netflix was also competing with other streaming platforms such as Hulu and Amazon Prime. Even though more competitors have entered the video streaming market since that time, Netflix has expanded to produce their own award-winning content and operates in a global environment with sales in over 190 countries.

Providing video streaming content consumes a large amount of electrical energy. Netflix’s external stakeholders include the communities in which they operate. They recognize their corporate social responsibility to minimize their contribution to climate change. Since 2019, Netflix has published an annual report that tracks their progress in reducing harmful emissions.