Much of the media that is consumed is done so by way of streaming, which is a relatively new technology as we know it today. Streaming was actually envisioned in the 1920s, but the concept laid dormant until the 1990s when computer technology could accommodate it. Microsoft, Real Networks, Adobe, and Apple were among the companies that developed it into what would lay the groundwork for a company such as YouTube to completely demonstrate and capitalize on its power. However, Netflix was the first company to harness the power of streaming to build a wildly successful subscription-based business model that the biggest media companies had to follow.
The Legend of why Netflix exists, which may or may not be true, is that Blockbuster video pissed Reed Hastings, the founder of Netflix, off. Reed tells the story that he rented the film “Apollo 13” on DVD from Blockbuster and had to pay $40 in fees when he returned it late. He basically vowed “never again” and thought of a system that would allow consumers to select DVDs online and have them shipped directly to their homes. Netflix Subscribers would pay a low monthly fee for multiple rentals and people could send the DVDs back wherever they wanted so other DVDs could be shipped. Most importantly, there was no late fee. That was an entirely new concept and until that time movie lovers had to travel to Blockbuster Video and other similar locations to rent new films. People love convenience and Netflix began to thrive while the Blockbuster Video store rental model became nearly extinct. Reed had unintentionally gotten his revenge on Blockbuster for their late fees.
In 1997, Reed Hastings and Marc Randolph founded Netflix as a DVD rental company that allowed consumers to select movies online and have them shipped as DVDs directly to their homes. That was entirely new and until that time movie lovers had to travel to Blockbuster Video and other similar locations to rent new films, which were not on cable, on DVDs or VHS cassettes. People love convenience and Netflix began to thrive while the Blockbuster Video store rental model became nearly extinct. (need numbers)
Just as Netflix was right about the prediction that people would rather have DVDs mailed directly to them instead of traveling to stores, they figured that people would like to instantly stream movies and TV shows even better. So, in 2007 they began streaming content from their website. They soon utilized the popularity of iPads, iPhones, PlayStations, XBOXs, etc. as means for customers to download the Netflix App and stream movies and TV shows directly to their mobile devices and TV screens. Subscriptions went through the roof (numbers) and in 2009 they had (numbers) DVD rental customers and (numbers) streaming customers.
Netflix continued to look to the future and realized that it was a flawed business model to be solely dependent on streaming other companies’ content, which they had to pay hefty licensing fees for. Additionally, other streaming services, such as HBO Go, would be able to offer a wider selection of newer content to their streaming customers, resulting in more competition. Netflix realized that they truly had to differentiate themselves from their upcoming competition and figured the best way to do that was to offer their customers exclusive content that was produced in-house. They were in a perfect position turn themselves into a film studio because they were cash rich with access to millions of subscribers already using their app and website, as an already established powerful distribution platform.
Netflix invested money into their own productions and snagged top talent to write, produce, star, and direct their first major original series “House of Cards.” The show became a hit and its multiple Emmy wins confirmed that its quality was indistinguishable from the best network and cable shows. Its success paved the way for “Orange is the New Black,” “Stranger Things,” “Jessica Jones,” “Luke Cage,” “The Crown,” “DareDevil,” “Black Mirror,” “Godless,” “Castlevania,” “Ozark,” and other top shows watched by millions. Netflix also became a place where canceled or shelved TV shows with cult followings, such as “Arrested Development” and “Longmire,” and “Voltron (2017)” could be resurrected.
Netflix single handedly proved how successful a subscription-based streaming service could be. They leapfrogged head of Youtube (launched in 2005), the company that revolutionized streaming video and offered streaming film rentals, and Amazon’s Unbox Service (launched in 2006), which allowed viewers to download full-length films and would later become the streaming services Amazon Video on Demand and then Prime Video. They even bested the content creation giants– the major studios: 20th Century Fox (now Disney), NBC Universal (Comcast), and Warner Brothers (now AT&T) who joined forces to create Hulu in 2006. However, they have failed to gain the same market share and as of 2019, Hulu has less than 30 million subscribers and Netflix has over 100 million global subscribers.
CBS stood alone from the pack and launched its subscription service CBS All Access in 2014 that allowed consumers to stream all current and past CBS content at $5.99 (ad supported) and $9.99 (ad-free) price points. The service released its first original programming in 2017 with The Good Fight (2017) and Star Trek: Discovery (2017). Currently, All Access has 2 million subscribers.
In 2010, HBO launched HBO Go, which allowed its current customers to stream all HBO content at no additional cost. In 2015, that service was followed by HBO Now, which allowed anyone with internet access to watch all HBO content for a $14.99/mo fee. This was a highly significant change to HBO’s business model because the focus on streaming made it possible for HBO to offer its service directly consumers for the first time without the need for a cable TV subscription, making them an autonomous distribution platform like Netflix.
All of the major content providers had to follow Netflix’s example and begin streaming their content via their own apps or via their cable provider’s apps.
Many other services such as Showtime Now (CBS), Shudder (AMC), DC Universe (AT&T), Britbox (BBC and ITV) also have subscription-based streaming services. Even YouTube, which was the first company based solely on streaming content, began to create their own original content for their YouTube Premium platform.