​#StartupStories Netflix: How to Become the Leader in Streami | Idea factory

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Netflix: How to Become the Leader in Streaming Services

Background
Mark Randolph and Reed Hastings founded Netflix in 1997. Interestingly, they were not amateurs in matters of IT business. Just in 1997, Pure Software, founded by Reed, was sold for 700 million US dollars. And Randolph was one of its leading specialists.

The idea of the small service was simply brilliant — CD rental with delivery directly to customers’ home by post. This way entrepreneurs wanted to make money on consumers’ laziness.

At the time of launch, the price of the service amounted to $4, and the delivery cost $2. The idea was risky, because the only guarantee of the return of the discs was a restriction for those who already had CDs in their hands.

Surprisingly, at the beginning of 2003, the number of customers exceeded a million and the company generated $6,5 million in revenue. In 2005 the amount of users hit 4,5 million.

The reasons that forced Mark Randolph to leave the business and sell his stake in it still remain undisclosed. None of the entrepreneurs have commented on the reason for his departure.

Since 2007, Netflix has started distributing streaming videos. Thanks to this step, the organization quickly became one of the largest in the world. However, if Hastings had given priority exclusively to DVDs, he would have gone bankrupt.

Success Secret
The success of one of the most popular multimedia services in the world is largely due to the study of user needs. Netflix never introduces any changes without first asking for the audience’s opinion.

The company not only carefully analyzes the actions of competitors, but also produces its own content, from movies to TV series. In 2014, the statistics of visits reached the historic high of 50 million, which made Netflix the greatest multimedia provider on earth.

What do you think helped Netflix succeed? Comment below