Netflix's beginnings were way different than what it is today.
Netflix is undoubtedly the biggest name in video streaming in the world today, with up to 220.67 million paid subscribers globally as of the second quarter of 2022. But many people are unaware that when Netflix was founded some 25 years ago, the company was very different from what it is today.
From the late 2010s to the present day, Netflix has become the go-to for video streaming of movies and television series. But its beginnings go back to this very day in 1997, when entrepreneurs Marc Randolph and Reed Hastings founded the company in Scotts Valley, California, as a video-rental company.
When Was Netflix Founded and How Did It Begin As a Streaming Service?
The idea of renting out movies and other content began with the development of the DVD, which Randolph had the foresight to predict would overtake VHS cassettes as a standard for distributing content, Make Use Of reported. It was then they came up with the idea of creating a subscription-based service that had no due dates or late fees, and on top of that, unlimited access to content for the price tag of $19.95.
The service worked like this: Subscribers can use a "Queue" in which they would specify which movies they would like to have mailed to them and a delivery system that automatically mailed out the DVDs as soon as the previous rentals were returned. Netflix first mailed out the DVDs using white envelopes, which changed to yellow envelopes in 2000. In 2001, they started mailing them in the iconic red envelopes that aesthetically aligned with the company's branding today.
The DVDs in the red envelopes also arrived with a postage-paid return sleeve inside, as Netflix would cover the costs of returning the DVDs after renting them. Five years after the company was born, Netflix was already shipping out millions of DVDs every day.
How Netflix Evolved Further Into an Online Streaming Service
During the Internet boom in the late 1990ss and early 2000s, Netflix launched a Netflix Prize contest that would award $1 million to anyone who could improve its recommendation system by 10%, Britannica reported. This recommendation system was an algorithm that would predict a user's movie preferences based on their previous rentals. In 2009, the award was given to BellKor's Pragmatic Chaos, a group of seven mathematicians, computer scientists, and engineers from the US, Canada, Austria, and Israel.
It was in 2007 that Netflix began to offer subscribers the option to stream some of its films and TV series directly through the Internet. Three years later, in 2010, the company began to offer a streaming-only plan that provided unlimited streaming services and no DVD rentals. It was then that Netflix began to conquer the world with its streaming-only plan that was made available in Canada, Latin America, the UK, Ireland, and more.
Other Interesting Facts About Netflix
Netflix remains to be the top streaming company despite having reported losing subscribers for the first time in 10 years. Back in 2000, Hastings approached the widely popular Blockbuster to offer a partnership, but its CEO declined, Interesting Engineering reported.
Blockbuster was also given an opportunity to purchase Netflix for $50 million, but they were uninterested. Today, Blockbuster is shuttered, and Netflix now has a net worth of over $100 billion.
