Netflix was founded in 1997 as a mail-order company that rented and sold DVDs over the internet. Today Netflix is the world’s leading internet television network with more than 36 million members in 40 countries enjoying more than one billion hours of TV shows and movies every month.  On a normal weeknight, Netflix accounts for almost a third of all internet traffic entering North American homes. That’s more than YouTube, Hulu, Amazon.com, HBO Go, iTunes, and BitTorrent combined. What’s more, like other networks that started out broadcasting other peoples content (e.g., AMC, HBO), Netflix has recently begun creating new content in the form of original series such as House of Cards and Hemlock Grove.  So how did a DVD mail order company become the world’s largest provider of on-demand internet streaming media?  Let’s find out.

Netflix was established in 1997 with a new business model of renting DVDs through a mail-order service and in 1999 they launched their subscription service, offering unlimited rentals for one low monthly subscription. By 2007 Netflix had 7.5 million members in their subscription service. That was also the year they introduced streaming, which allows members to instantly watch television shows and movies on their personal computers.  Streaming had already been out for a few years, thanks to Microsoft, RealNetworks, and Macromedia, and really caught on when YouTube was launched in 2005 as a video sharing website.  And in 2007, Hulu, a joint venture of NBC Universal Television Group, Fox Broadcasting Company, and Disney-ABC Television Group started as a website offering on-demand streaming video of TV shows, movies, webisodes and other new media, trailers, and clips, and from NBC, Fox, ABC, TBS, and many other networks and studios.

By 2011, Netflix had 20 million members and realized that most of their customers were trending toward the streaming service.  Seeing this change in customer preference lead the company to a rare misstep. To enable Netflix to focus its resources and energy on acquiring streaming content and to phase out the less profitable DVD-by-mail service, Netflix unveiled plans to raise prices and separate into two companies—a DVD mailer called Qwikster and a streaming entity still under the Netflix name. The split was never well-articulated and Netflix lost millions of customers (and market capital) in the process.  But after realizing this move had backfired, they killed Qwikster and mounted one of the all-time great comebacks. Not only did they focus like a laser on streaming movies and television shows, but began to developing their own original content.

In a move that has industry insiders saying that Netflix wants to become the next HBO, the company has invested hundreds of millions of dollars in original series, such as the political drama House of Cards, which stars Kevin Spacey and Robin Wright, the murder mystery Hemlock Grove and Orange Is the New Black, a show set in a women’s prison that will air in July. They also acquired the rights to and produced the fourth season of the critically-acclaimed comedy Arrested Development, which will air later this month, and co-produce the second season of Lilyhammer starring Steven Van Zandt.  If that wasn’t enough, they have also created a Ricky Gervais show called Derek and a children’s show called Turbo: F.A.S.T. that is co-produced with DreamWorks Animation.

Currently Netflix is taking a big gamble that a lot of people will want to stream entertainment to their mobile personal electronic devices rather than stay stuck in their living rooms and their cable boxes.  If they’re right, the next few years could see a monumental shift in how we watch ‘television.’

Images:

http://mereorthodoxy.com/wp-content/uploads/2013/02/house-of-cards-final-poster.jpg

http://i.i.com.com/cnwk.1d/i/tim/2013/01/09/ad-netflix_610x447.png

Sources:

https://signup.netflix.com/MediaCenter/Press

http://www.theverge.com/2013/4/30/4287290/netflix-continues-original-programming-onslaught-with-orange-is-the-new-black-july-11

http://www.guardian.co.uk/media-network/media-network-blog/2013/mar/01/history-streaming-future-connected-tv

http://www.fundinguniverse.com/company-histories/netflix-inc-history/

http://www.businessweek.com/articles/2013-05-09/netflix-reed-hastings-survive-missteps-to-join-silicon-valleys-elite

The Wall Street Journal once reported on WebTV: “Zenith Electronics is planning a television set that will incorporate a microprocessor and modem, as well as technology developed by Diba Inc. that allows viewers to surf the Web via a remote control device.”  — May 10, 1996 Edition

WebTV never really caught on with consumers. The technology was ahead of its time. Without streaming video and television services prevalent at the time, WebTV was essentially an Internet browser for a TV, marketed to people who wanted the convenience of email without the inconvenience of buying a bulky desktop computer. My, how times have changed.

Forbes magazine reported in February that Internet-based TV is catching on with every viewing demographic and the trend shows no signs of slowing. “While people are still watching much more traditional TV than streaming video, our data shows we’re on a clear and irreversible course toward an IP-delivered future,” said Bismarck Lepe, co-founder and president of products for Ooyala.

The two frontrunners vying for the hearts and minds of today’s programming-hungry masses are Apple TV and Google TV.

At their cores, Apple TV and Google TV operate much like a smartphone – providing apps, so that customers can choose their viewing destiny. There are, however, subtle differences between the two services.

Both services require the customer to buy hardware that easily connects to a cable box (Google TV) or a television (Apple TV) through an HDMI cable. Apple TV hardware is made by Apple, while Google TV hardware (called the Buddy Box) is produced by a third-party (Sony and Vizio), and some newer TVs come with Google TV included.

Apple TV’s featured apps include Hulu Plus, Netflix and Vimeo apps, while also providing original programming from the Wall Street Journal and a limited amount of programming from the NBA, NHL and MLB networks (game recaps, not games). Google TV’s featured apps include HBO GO, Netflix, Amazon, Pandora and original programming from Crackle. While access to these apps is included, customers still must pay monthly for the actual services (Netflix, Hulu Plus, etc.). So while you have access to Netflix software, you still have to pay for the monthly service if you want the programming.

It’s a close race for which service is better. The technology is still too new with too few users for a clear victor to emerge. But as customers become more familiar with the benefits of these devices and more developers enter the market, it’s likely that Apple, Google or a player to be named later will dominate the Internet TV market.

The people have spoken…and they love Mad Men.

Ratings are up and it is clear Don Draper has captured an audience. But, there is more to the story.

Through Mad Men, we are getting a look at how people have turned to Netflix and other ‘alternative’ distribution methods to ‘catch-up’ on a series and then jump back in when it returns in real-time to its original network. (See link to article below.)

Alternative is in quotes because Nexflix, Hulu, etc. are less and less alternative and more and more mainstream these days. Viewers view content in the ways that are most convenient and accessible for their needs. Where there’s a will to watch, there is a way!

As we all know, people are busy, but that doesn’t mean they are willing to miss out on the gem that their friends, neighbors and critics have found in Mad Men and the same phenomenon applies to any and all ‘hot’ shows. It’s never too late to catch up, get up to speed and tag-in… even if a series has been around for many seasons.

And, this trend or truth has many consequences for the creators and distributors of content—positive ones! More channels and more distribution methods drive the need for content; content that’s original and inspired! Clearly, with more ways to watch, the need for content will continue to increase.

Distribution channels evolve, too. Mad Men airs on AMC; which wasn’t exactly synonymous with Emmy-worthy original content in the past—but wow, has that changed with Mad Men, Breaking Bad and The Walking Dead! And, we all know that HBO and Showtime didn’t used to produce amazing original content and now they churn it out like child’s play.

So, if it can be done, this progress in original content development, Netflix and others will want to develop their own original programs, too. They won’t be alone. Alternative entertainment methods will continue to crop up and they will need content as well…

Have any ideas you’d like to share?

Speaking of Mad Men, New Show Studios own President Anthony Valkanas got to meet and greet and enjoy a photo op with Mad Men creator Matthew Weiner at the NATPE (National Association of Television Program Executives) Market & Conference in January in Miami. Certainly a pleasure to rub elbows with the creator of such a successful series.

Source:   http://www.dailyfinance.com/2012/04/19/mad-men-and-don-draper-should-buy-netflix-a-drink/