Netflix specials

Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a film and television series library through distribution deals as well as its own productions, known as Netflix Originals.

As of September 2022, Netflix had 222 million subscribers worldwide, including 73.3 million in the United States and Canada; 73.0 million in Europe, the Middle East and Africa, 39.6 million in Latin America and 34.8 million in the Asia-Pacific region. It is available worldwide aside from Mainland China, Syria, North Korea, and Russia. Netflix has played a prominent role in independent film distribution, and it is a member of the Motion Picture Association (MPA).

Netflix can be accessed via web browsers or via application software installed on smart TVs, set-top boxes connected to televisions, tablet computers, smartphones, digital media players, Blu-ray players, video game consoles and virtual reality headsets on the list of Netflix-compatible devices. It is available in 4K resolution. In the United States, the company provided Digital Video Disc (DVD) and Blu-ray rentals delivered individually via the United States Postal Service from regional warehouses.

Netflix initially both sold and rented DVDs by mail, but the sales were eliminated within a year to focus on the DVD rental business. In 2007, Netflix introduced streaming media and video on demand. The company expanded to Canada in 2010, followed by Latin America and the Caribbean. Netflix entered the film and television production industry in 2013, debuting its first series ''House of Cards''. In January 2016, it expanded to an additional 130 countries and then operated in 190 countries.

The company is ranked 115th on the '' Fortune 500'' and 219th on the Forbes Global 2000. It is the second largest entertainment/media company by market capitalization as of February 2022. In 2021, Netflix was ranked as the eighth-most trusted brand globally by Morning Consult. During the 2010s, Netflix was the top-performing stock in the S&P 500 stock market index, with a total return of 3,693%.

Netflix is headquartered in Los Gatos, California, in Santa Clara County, with the two CEOs, Hastings and Ted Sarandos, split between Los Gatos and Los Angeles, respectively. It also operates international offices in Asia, Europe and Latin America including in Canada, France, Brazil, Netherlands, India, Italy, Japan, Poland, South Korea and the United Kingdom. The company has production hubs in Los Angeles, Albuquerque, London, Madrid, Vancouver and Toronto. Compared to other distributors, Netflix pays more for TV shows up front, but keeps more "upside" (i.e. future revenue opportunities from possible syndication, merchandising, etc.) on big hits.

History

Launch as a mail-based rental business (1997–2006)

Netflix was founded by Marc Randolph and Reed Hastings on August 29, 1997 in Scotts Valley, California. Hastings, a computer scientist and mathematician, was a co-founder of Pure Atria, which was acquired by Rational Software Corporation in 1997 for $750 million, then the biggest acquisition in Silicon Valley history. Randolph had worked as a marketing director for Pure Atria after Pure Atria acquired a company where Randolph worked. He was previously a co-founder of MicroWarehouse, a computer mail-order company as well as vice president of marketing for Borland International. Hastings and Randolph came up with the idea for Netflix while carpooling between their homes in Santa Cruz, California and Pure Atria's headquarters in Sunnyvale. Patty McCord, later head of human resources at Netflix, was also in the carpool group. Randolph admired Amazon.com and wanted to find a large category of portable items to sell over the Internet using a similar model. Hastings and Randolph considered and rejected selling and renting VHS tapes as too expensive to stock and too delicate to ship. When they heard about DVDs, first introduced in the United States on March 24, 1997, they tested the concept of selling or renting DVDs by mail by mailing a compact disc to Hastings's house in Santa Cruz. When the disc arrived intact, they decided to enter the $16 billion home-video sales and rental industry. Hastings is often quoted saying that he decided to start Netflix after being fined $40 at a Blockbuster store for being late to return a copy of ''Apollo 13'', a claim since repudiated by Randolph. Hastings invested $2.5 million into Netflix from the sale of Pure Atria. Netflix.com launched as the first DVD rental and sales website in 1998 with 30 employees and 925 titles available—nearly all DVDs published. Randolph and Hastings met with Jeff Bezos, where Amazon.com offered to acquire Netflix for between $14 and $16 million. Fearing competition from Amazon, Randolph at first thought the offer was fair but Hastings, who owned 70% of the company, turned it down on the plane ride home.

Initially, Netflix offered a per-rental model for each DVD but introduced a monthly subscription concept in September 1999. The per-rental model was dropped by early 2000, allowing the company to focus on the business model of flat-fee unlimited rentals without due dates, late fees, shipping and handling fees, or per-title rental fees. In September 2000, during the dot-com bubble, while Netflix was suffering losses, Hastings and Randolph offered to sell the company to Blockbuster LLC for $50 million. John Antioco, CEO of Blockbuster, thought the offer was a joke and declined, saying "The dot-com hysteria is completely overblown." While Netflix experienced fast growth in early 2001, the continued effects of the dot-com bubble collapse and the September 11 attacks caused the company to hold off plans for its initial public offering (IPO) and to lay off one-third of its 120 employees.

DVD players were a popular gift for holiday sales in late 2001, and demand for DVD subscription services were "growing like crazy", according to chief talent officer Patty McCord. The company went public on May 29, 2002, selling 5.5 million shares of common stock at US$15.00 per share. In 2003, Netflix was issued a patent by the U.S. Patent & Trademark Office to cover its subscription rental service and several extensions. Netflix posted its first profit in 2003, earning $6.5 million on revenues of $272 million; by 2004, profit had increased to $49 million on over $500 million in revenues. In 2005, 35,000 different films were available, and Netflix shipped 1 million DVDs out every day.

In 2004, Blockbuster introduced a DVD rental service, which not only allowed users to check out titles through online sites but allowed for them to return them at brick-and-mortar stores. By 2006, Blockbuster's service reached two million users, and while trailing Netflix's subscriber count, was drawing business away from Netflix. Netflix lowered fees in 2007. While it was an urban legend that Netflix ultimately "killed" Blockbuster in the DVD rental market, Blockbuster's debt load and internal disagreements hurt the company.

On April 4, 2006, Netflix filed a patent infringement lawsuit in which it demanded a jury trial in the United States District Court for the Northern District of California, alleging that Blockbuster LLC's online DVD rental subscription program violated two patents held by Netflix. The first cause of action alleged Blockbuster's infringement of copying the "dynamic queue" of DVDs available for each customer, Netflix's method of using the ranked preferences in the queue to send DVDs to subscribers, and Netflix's method permitting the queue to be updated and reordered. The second cause of action alleged infringement of the subscription rental service as well as Netflix's methods of communication and delivery. The companies settled their dispute on June 25, 2007; terms were not disclosed.

On October 1, 2006, Netflix announced the Netflix Prize, $1,000,000 to the first developer of a video-recommendation algorithm that could beat its existing algorithm Cinematch, at predicting customer ratings by more than 10%. On September 21, 2009, it awarded the $1,000,000 prize to team "BellKor’s Pragmatic Chaos." Cinematch, launched in 2000, is a recommendation system that recommended movies to its users, many of which they might not ever had heard of before.

Through its division Red Envelope Entertainment, Netflix licensed and distributed independent films such as ''Born into Brothels'' and '' Sherrybaby''. In late 2006, Red Envelope Entertainment also expanded into producing original content with filmmakers such as John Waters. Netflix closed Red Envelope Entertainment in 2008.

Transition to streaming services (2007–2012)

In January 2007, the company launched a streaming media service, introducing video on demand via the Internet. However, at that time it only had 1,000 films available for streaming, compared to 70,000 available on DVD. The company had for some time considered offering movies online, but it was only in the mid-2000s that data speeds and bandwidth costs had improved sufficiently to allow customers to download movies from the net. The original idea was a "Netflix box" that could download movies overnight, and be ready to watch the next day. By 2005, Netflix had acquired movie rights and designed the box and service. But after witnessing how popular streaming services such as YouTube were despite the lack of high-definition content, the concept of using a hardware device was scrapped and replaced with a streaming concept.

In February 2007, Netflix delivered its billionth DVD, a copy of '' Babel'' to a customer in Texas. In April 2007, Netflix recruited Anthony Wood, one of the early DVR business pioneers, to build a "Netflix Player" that would allow streaming content to be played directly on a television set rather than a PC or laptop. While the player was initially developed at Netflix, Reed Hastings eventually shut down the project to help encourage other hardware manufacturers to include built-in Netflix support.

In January 2008, all rental-disc subscribers became entitled to unlimited streaming at no additional cost. This change came in a response to the introduction of Hulu and to Apple's new video-rental services. In August 2008, the Netflix database was corrupted and the company was not able to ship DVDs to customers for 3 days, leading the company to move all its data to the Amazon Web Services cloud. In November 2008, Netflix began offering subscribers rentals on Blu-ray and discontinued its sale of used DVDs. In 2009, Netflix streams overtook DVD shipments.

On January 6, 2010, Netflix agreed with Warner Bros. to delay new release rentals 28 days prior to retail, in an attempt to help studios sell physical copies, and similar deals involving Universal Pictures and 20th Century Fox were reached on April 9. In July 2010, Netflix signed a deal to stream movies of Relativity Media. In August 2010, Netflix reached a five-year deal worth nearly $1 billion to stream films from Paramount, Lionsgate and Metro-Goldwyn-Mayer. The deal increased Netflix's annual spending fees, adding roughly $200 million per year. It spent $117 million in the first six months of 2010 on streaming, up from $31 million in 2009. On September 22, 2010, the company first began offering streaming service to the international market, in Canada. In November 2010, Netflix began offering a standalone streaming service separate from DVD rentals.

In 2010, Netflix acquired the rights to '' Breaking Bad'', produced by Sony Pictures Television, after the show's third season, at a point where original broadcaster AMC had expressed the possibility of cancelling the show. Sony pushed Netflix to release ''Breaking Bad'' in time for the fourth season, which as a result, greatly expanded the show's audience on AMC due to new viewers binging on the Netflix past episodes, and doubling the viewership by the time of the fifth season. ''Breaking Bad'' is considered the first such show to have this "Netflix effect."

In January 2011, Netflix introduced a Netflix button for certain remote controls, allowing users to instantly access Netflix on compatible devices. In May 2011, Netflix's streaming business became the largest source of Internet streaming traffic in North America, accounting for 30% of traffic during peak hours. On July 12, 2011, Netflix announced that it would separate its existing subscription plans into two separate plans: one covering the streaming and the other DVD rental services. The cost for streaming would be $7.99 per month, while DVD rental would start at the same price. In September 2011, Netflix announced a content deal with DreamWorks Animation. In September 2011, Netflix expanded to 43 countries in Latin America. On September 18, 2011, Netflix announced its intentions to rebrand and restructure its DVD home media rental service as an independent subsidiary called Qwikster, separating DVD rental and streaming services. On October 10, 2011, Netflix announced that it would retain its DVD service under the name Netflix and that its streaming and DVD-rental plans would remain branded together.

On January 4, 2012, Netflix started its expansion to Europe, launching in the United Kingdom and Ireland. In February 2012, Netflix signed a licensing deal with The Weinstein Company. In March 2012, Netflix acquired the domain name DVD.com. By 2016, Netflix rebranded its DVD-by-mail service under the name ''DVD.com, A Netflix Company''. In April 2012, Netflix filed with the Federal Election Commission (FEC) to form a political action committee (PAC) called FLIXPAC. Netflix spokesperson Joris Evers tweeted that the intent was to "engage on issues like net neutrality, bandwidth caps, UBB and VPPA". In June 2012, Netflix signed a deal with Open Road Films.

On August 23, 2012, Netflix and The Weinstein Company signed a multi-year output deal for RADiUS-TWC films. In September 2012, Epix signed a five-year streaming deal with Netflix. For the initial two years of this agreement, first-run and back-catalog content from Epix was exclusive to Netflix. Epix films came to Netflix 90 days after premiering on Epix. These included films from Paramount, Metro-Goldwyn-Mayer and Lionsgate.

On October 18, 2012, Netflix launched in Denmark, Finland, Norway and Sweden. On December 4, 2012, Netflix and Disney announced an exclusive multi-year agreement for first-run United States subscription television rights to Walt Disney Studios' animated and live-action films, with classics such as ''Dumbo'', '' Alice in Wonderland'' and ''Pocahontas'' available immediately and others available on Netflix beginning in 2016. Direct-to-video releases were made available in 2013. The agreement with Disney ended in 2019 due to the launch of Disney+. Netflix retained the rights to continue streaming the Marvel series that were produced for the service until March 1, 2022, following Disney's reacquisition of the rights to those series.

On January 14, 2013, Netflix signed an agreement with Time Warner's Turner Broadcasting System and Warner Bros. Television to distribute Cartoon Network, Warner Bros. Animation, and Adult Swim content, as well as TNT's ''Dallas'', beginning in March 2013. The rights to these programs were given to Netflix shortly after deals with Viacom to stream Nickelodeon and Nick Jr. programs expired.

Development of original programming (2013–2017)

In 2013, the company decided to slow launches in Europe to control subscription costs.

In February 2013, Netflix announced it would be hosting its own awards ceremony, ''The Flixies''.

On March 13, 2013, Netflix added a Facebook sharing feature, letting United States subscribers access "Watched by your friends" and "Friends' Favorites" by agreeing. This was not legal until the Video Privacy Protection Act was modified in early 2013.

In February 2013, DreamWorks Animation and Netflix co-produced '' Turbo Fast'', based on the movie ''Turbo'', which premiered in July. Netflix has since become a major distributor of animated family and kid shows.

In July 2013, '' Orange Is the New Black'' debuted on Netflix, which became Netflix's most-watched original series.

On August 1, 2013, Netflix reintroduced the "Profiles" feature that permits accounts to accommodate up to five user profiles.

In September 2013, Netflix launched in the Netherlands and was then available in 40 countries.

In November 2013, Netflix and Marvel Television announced a five-season deal to produce live-action Marvel superhero-focused series: Daredevil, Jessica Jones, Iron Fist and Luke Cage. The deal involves the release of four 13-episode seasons that culminate in a mini-series called '' The Defenders''. ''Daredevil'' and ''Jessica Jones'' premiered in 2015. The ''Luke Cage'' series premiered on September 30, 2016, followed by '' Iron Fist'' on March 17, 2017, and '' The Defenders'' on August 18, 2017. The series, however, were removed from Netflix on March 1, 2022, following Disney's announcement to reacquire the series' rights after Netflix's deal expired.

In February 2014, Netflix discovered that Comcast Cable was slowing its traffic down and agreed to pay Comcast to directly connect to the Comcast network.

On March 7, 2014, new ''Star Wars'' content was released on Netflix's streaming service: the sixth season of the television series '' Star Wars: The Clone Wars'', as well as all five prior and the feature film.

In April 2014, Netflix signed ''Arrested Development'' creator Mitchell Hurwitz and his production firm The Hurwitz Company to a multi-year deal to create original projects for the service.

In May 2014, Netflix acquired streaming rights to films produced by Sony Pictures Animation.

In June 2014, Netflix unveiled a global rebranding: a new logo, which uses a modern typeface with the drop shadowing removed, and a new website UI.

In September 2014, Netflix became available in Austria, Belgium, France, Germany, Luxembourg, and Switzerland.

On September 10, 2014, Netflix participated in Internet Slowdown Day by deliberately slowing down its speed in protest of net neutrality laws.

In October 2014, Netflix announced a four-film deal with Adam Sandler and his Happy Madison Productions.

In April 2015, following the launch of '' Daredevil'', Netflix director of content operations Tracy Wright announced that Netflix had added support for audio description (a narration track with aural descriptions of key visual elements for the blind or visually impaired), and had begun to work with its partners to add descriptions to its other original series over time. The following year, as part of a settlement with the American Council of the Blind, Netflix agreed to provide descriptions for its original series within 30 days of their premiere, and add screen reader support and the ability to browse content by availability of descriptions.

In March 2015, Netflix expanded to Australia and New Zealand. In September 2015, Netflix launched in Japan, its first country in Asia. In October 2015, Netflix launched in Italy, Portugal, and Spain.

In January 2016, at the 2016 Consumer Electronics Show, Netflix announced a major international expansion of its service into 130 additional countries. It then had become available worldwide except China, Syria, North Korea, Kosovo and Crimea.

In May 2016, Netflix created a tool called Fast.com to determine the speed of an Internet connection. It received praise for being "simple" and "easy to use", and does not include online advertising, unlike competitors.

On November 30, 2016, Netflix launched an offline playback feature, allowing users of the Netflix mobile apps on Android or iOS to cache content on their devices in standard or high quality for viewing offline, without an Internet connection.

In 2016, Netflix released an estimated 126 original series or films, more than any other network or cable channel.

In 2016, Netflix announced plans to expand its in-house production division and produced TV series including ''The Ranch'' and ''Chelsea''.

In February 2017, Netflix signed a music publishing deal with BMG Rights Management, whereby BMG will oversee rights outside of the United States for music associated with Netflix original content. Netflix continues to handle these tasks in-house in the United States.

On April 25, 2017, Netflix signed a licensing deal with IQiyi, a Chinese video streaming platform owned by Baidu, to allow selected Netflix original content to be distributed in China on the platform.

On August 7, 2017, in the first acquisition of an entire company, Netflix acquired Millarworld, the creator-owned publishing company of comic book writer Mark Millar.

On August 14, 2017, Netflix announced that it had entered into an exclusive development deal with Shonda Rhimes and her production company Shondaland.

In September 2017, Netflix announced it would offer its low-broadband mobile technology to airlines to provide better in-flight Wi-Fi so that passengers can watch movies on Netflix while on planes.

In September 2017, Minister of Heritage Mélanie Joly announced that Netflix had agreed to make a (US$400 million) investment over the next five years in producing content in Canada. The company denied that the deal was intended to result in a tax break. Netflix realized this goal by December 2018.

In October 2017, Netflix iterated a goal of having half of its library consist of original content by 2019, announcing a plan to invest $8 billion on original content in 2018. There will be a particular focus on films and anime through this investment, with a plan to produce 80 original films and 30 anime series.

In October 2017, Netflix introduced the "Skip Intro" feature which allows customers to skip the intros to shows on its platform. They do so through a variety of techniques including manual reviewing, audio tagging, and machine learning.

In November 2017, Netflix signed an exclusive multi-year deal with ''Orange Is the New Black'' creator Jenji Kohan.

In November 2017, Netflix withdrew from co-hosting the 75th Golden Globe Awards with The Weinstein Company due to the Harvey Weinstein sexual abuse cases.

Expansion into international productions (2017–2020)

In November 2017, Netflix announced that it would be making its first original Colombian series, to be executive produced by Ciro Guerra. In December 2017, Netflix signed ''Stranger Things'' director-producer Shawn Levy and his production company 21 Laps Entertainment to what sources say is a four-year deal. In 2017, Netflix invested in distributing exclusive stand-up comedy specials from Dave Chappelle, Louis C.K., Chris Rock, Jim Gaffigan, Bill Burr and Jerry Seinfeld.

In February 2018, Netflix acquired the rights to ''The Cloverfield Paradox'' from Paramount Pictures for $50 million and launched on its service on February 4, 2018, shortly after airing its first trailer during Super Bowl LII. Analysts believed that Netflix's purchase of the film helped to make the film instantly profitable for Paramount compared to a more traditional theatrical release, while Netflix benefited from the surprise reveal. Other films acquired by Netflix include international distribution for Paramount's ''Annihilation'' and Universal's '' News of the World'' and worldwide distribution of Universal's ''Extinction'', Warner Bros.' '' Mowgli: Legend of the Jungle'', Paramount's '' The Lovebirds'' and 20th Century Studios' '' The Woman in the Window''. In March, the service ordered ''Formula 1: Drive to Survive'', a racing docuseries following teams in the Formula One world championship.

In March 2018, Sky UK announced an agreement with Netflix to integrate Netflix's subscription VOD offering into its pay-TV service. Customers with its high-end Sky Q set-top box and service will be able to see Netflix titles alongside their regular Sky channels. In October 2022, Netflix revealed that its annual revenue from the UK subscribers in 2021 was £1.4bn.

In April 2018, Netflix pulled out of the Cannes Film Festival, in response to new rules requiring competition films to have been released in French theaters. The Cannes premiere of '' Okja'' in 2017 was controversial, and led to discussions over the appropriateness of films with simultaneous digital releases being screened at an event showcasing theatrical film; audience members also booed the Netflix production logo at the screening. Netflix's attempts to negotiate to allow a limited release in France were curtailed by organizers, as well as French cultural exception law—where theatrically screened films are legally forbidden from being made available via video-on-demand services until at least 36 months after their release. Besides traditional Hollywood markets as well as from partners like the BBC
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