Netflix

• 1. Introduction

  ›

  Netflix started not as a streaming service but as a company that mailed DVDs in red envelopes. Marc Randolph and Reed Hastings founded it on the 29th of August 1997, in Scotts Valley, California, and within months they had a website where customers could rent discs one at a time. By 2005, some 35,000 different films were available, and the company was shipping a million DVDs every day. What no one outside the company fully grasped was that Hastings had reportedly told a colleague back in the late 1990s that his real goal was always streaming media, and that the DVDs were simply a way to build a customer base. The questions worth sitting with are these: how does a disc-by-mail company become the world's most-subscribed video service, what does it take to upend the Hollywood studio system from the outside, and what happens when a technology platform decides it wants to be a sports broadcaster, a gaming company, a theater owner, and a podcast network all at once?

• 2. The Red Envelope Era

  ›

  Netflix launched its website on the 14th of April 1998, charging customers per rental. The per-rental model lasted barely a year and a half; a monthly subscription replaced it in September 1999, and the per-rental option was gone by early 2000. The company also ran a division called Red Envelope Entertainment, which licensed and distributed independent films such as Born into Brothels in 2004 and Sherrybaby in 2006. By late 2006, Red Envelope had expanded into producing original content with directors including John Waters, before Netflix shut the division down in 2008. The billionth DVD in the company's history was delivered in February 2007 to a customer in Texas; the disc was a copy of Babel. That milestone arrived just one month after Netflix quietly launched a streaming service, and the two timelines ran in parallel for years before one consumed the other.

• 3. From Box to Browser

  ›

  The original streaming concept was hardware, not software: a "Netflix box" that would download movies overnight and be ready to watch the following day. By 2005 the company had acquired movie rights and designed both the box and the service around it. Then YouTube showed that audiences would tolerate low-definition video on a screen, and the hardware plan was scrapped. In January 2007, the service launched under the name "Watch Now," available only through Internet Explorer on a Windows computer, with 1,000 films, compared to 70,000 on DVD. Reed Hastings recruited Anthony Wood, founder of ReplayTV, in April 2007 to build a dedicated streaming player for the television, but Hastings then shut the project down so that other manufacturers would build Netflix support into their own devices instead. That pivot produced what became the Roku digital media player. Hollywood studios including 20th Century Fox, Sony Pictures, Paramount Pictures, and Warner Bros. licensed second-run content to the service in those early years, calculating that streaming posed no threat to their cable television relationships. They would later revise that assessment.

• 4. The Netflix Effect

  ›

  In 2010, Netflix acquired the streaming rights to Breaking Bad from Sony Pictures Television after the show's third season, at a moment when the original broadcaster AMC had openly discussed canceling it. Sony pushed Netflix to make the show available before the fourth season premiered on AMC. The strategy worked: new viewers found the earlier seasons on Netflix, binged them, and then watched the live broadcast, doubling the show's viewership by the time the fifth season aired. Breaking Bad is now described as the first show to experience what the industry began calling the "Netflix effect." The same year, Netflix reached a five-year deal worth nearly $1 billion to stream films from Paramount, Lionsgate, and Metro-Goldwyn-Mayer, adding roughly $200 million per year to its annual spending. The company had spent $117 million on streaming in the first six months of 2010 alone, up from $31 million in all of 2009.

• 5. House of Cards and the Original Bet

  ›

  Netflix had been quietly collecting behavioral data through Watch Now since its earliest days: which scenes customers replayed, which ones they skipped, and at what point in a show they stopped watching. In March 2011, the company used that data to make a straight-to-series order for House of Cards, a political drama led by Kevin Spacey, outbidding US cable networks. Executives said that customers' demonstrated love of films featuring Spacey and director David Fincher drove the acquisition decision. It was the first time a streaming service had commissioned a first-run television series. The same customer data also showed that subscribers binge-watched episodes in long uninterrupted runs, which is why all 13 episodes of House of Cards' first season were released at the same time on the 1st of February 2013. House of Cards became the first production formally marketed under the "Netflix Original" label. That same November, Netflix added Orange Is the New Black, adapted from Piper Kerman's memoir, and a new season of the previously canceled Fox sitcom Arrested Development.

• 6. Global Ambitions and the Qwikster Stumble

  ›

  Expansion outside North America began in September 2010, when Netflix launched in Canada. Latin America followed in September 2011, and the UK and Ireland came in January 2012. In that same period, Netflix also experienced its most public stumble. In September 2011, it announced a plan to spin its DVD rental service into a separate company called Qwikster, effectively forcing customers to manage two separate subscriptions. The backlash was swift: 800,000 of the company's 12 million subscribers cancelled, and the stock fell sharply. Within weeks Netflix reversed course, announced in October 2011 that the DVD service would stay under the Netflix name, and issued a public apology. The Qwikster episode illustrated how much the company's identity still rested on the DVD side, even as streaming was overtaking it. By January 2016, Netflix announced expansion into 130 additional countries at a single Consumer Electronics Show, making it available worldwide except in China, Syria, North Korea, Kosovo, and Crimea.

• 7. Sports, Gaming, and the Expanding Platform

  ›

  In July 2021, Netflix hired Mike Verdu, a former Electronic Arts and Facebook executive, as vice president of game development. Trial mobile gaming launched for subscribers in Poland in August 2021, with games based on Stranger Things available through the Netflix app at no extra cost. By November 2021, the games were live on Android globally and on iOS a week later. On the sports side, Netflix began with docuseries like Formula 1: Drive to Survive before moving to live events. The boxing match between Mike Tyson and Jake Paul, streamed in November 2024 from AT&T Stadium in Arlington, Texas, drew a peak of 65 million concurrent viewers according to Paul's promoter, surpassing the 2023 ICC Men's Cricket World Cup final. On the 25th of December 2024, Netflix aired its first-ever NFL games; both averaged over 30 million global viewers and became the two most-streamed NFL games in US history. A deal for WWE's Raw, valued at $500 million per year over ten years, began in January 2025. In December 2024, FIFA named Netflix the exclusive US broadcaster of the 2027 and 2031 FIFA Women's World Cup. By late 2025, the animated musical KPop Demon Hunters became Netflix's most popular film of all time, while the company simultaneously moved into podcasts and announced its first original podcast slate for 2026.

• 8. 325 Million Subscribers

  ›

  In January 2025, Netflix announced it had exceeded 300 million subscribers worldwide after adding 18.9 million new subscribers in the fourth quarter of 2024 alone, and 41 million across the full year. As of 2026, the service counts 325 million paid memberships across more than 190 countries. The US generates 21.18% of its web traffic, followed by the United Kingdom at 6.01%, Canada at 4.94%, and Brazil at 4.24%. The DVD-by-mail service that preceded all of this closed on the 29th of September 2023, having sent out more than 5 billion shipments over its lifetime. In May 2026, Netflix published a report stating that its expansion to more than 190 countries since 2016 had contributed $325 billion to the global economy, created 425,000 jobs, and involved $135 billion in investment in the TV and film industry. Netflix also announced that its ads tier had reached 250 million monthly active viewers as of that month, a figure that underscores how far the company's business model has traveled from its origins as a company that rented discs one at a time from a warehouse in Scotts Valley.