The name Netflix (NFLX 9.29%) has become synonymous with streaming video entertainment and is a household name in many parts of the world. The company added more than 25 million new subscribers in 2020 alone, boosted by the stay-at-home orders resulting from the pandemic. Those gains led to a record $11.9 billion in revenue so far this year, with the company generating positive cash flow for the first time in years.
But how much do you really know about Netflix? As ubiquitous as the company is, there are likely a few nuggets of trivia about the streaming pioneer that might surprise you. Here are three.
1. Rumor has it...
Netflix CEO Reed Hastings long maintained that he got the idea to start the then DVD-by-mail company after returning an Apollo 13 VHS tape to a video store after its due date and being charged a $40 late fee.
Co-founder Marc Randolph had a very different take, saying the story was a clever marketing ploy and "convenient fiction," that illustrated why Netflix was a better choice than its video store competitors. Randolph recounts that he and Hastings wanted to start a company akin to Amazon.com, peddling something via a website, though the form of the company was still unclear.
They originally toyed with the idea of a mail-order video cassette business (remember VHS tapes?), but they came to the conclusion that it would be cost-prohibitive. They eventually settled on the then-emerging technology of DVDs, even going so far as to send a compact disc (CD) through the mail to see if it would arrive undamaged. The experiment was a success, and Netflix was born.
2. Blockbuster turned down a chance to buy Netflix
In 2000, when Blockbuster was the dominant video rental company on the planet and Netflix was just a scrappy upstart, there was a moment when things could have turned out much differently for the streaming pioneer.
Netflix and its DVD-by-mail business was considered by its competitors to be a very small niche business which was losing money at the time. In 2000, Netflix grew its revenue seven-fold to $35 million, but its net loss nearly doubled to $57 million.
As the losses mounted, selling the business seemed like the only way out. Netflix put itself on the auction block and Hastings, Randolph, and Netflix's former chief financial officer Barry McCarthy made a pitch to Blockbuster CEO John Antioco to sell the company to its chief rival for $50 million. They were ultimately laughed out of the room in one of the biggest boardroom blunders in corporate history.
The rest is history. By 2010, Blockbuster had filed for bankruptcy and shuttered nearly all its stores and Netflix became the dominant streaming video provider on the planet. Just last quarter, Netflix generated more than $6.1 billion in revenue and a net income of $720 million. In trading this week, the company commanded a market cap of more than $214 billion, meaning Blockbuster missed out on an investment that would have generated returns of 4,280%.
3. It gave birth to another successful streaming enterprise
While Netflix has become synonymous with streaming movies and television shows over the internet, the company once toyed with the idea of creating its own set-top box.
In 2007, Netflix had a top-secret program, dubbed "Project Griffin," which was working to build "The Netflix Player." The device was envisioned as a small, black box, that consumers could plug directly into their televisions, making streaming easier for technologically challenged customers. While the idea is commonplace now, it was groundbreaking back then.
The box was developed and was just weeks from its debut, but CEO Reed Hastings had misgivings about alienating all the hardware makers (television, DVD, Blu-Ray) that had added the ubiquitous red "Netflix" button to their remotes. If the company delved into hardware, it might complicate the relationships with device manufacturers. Hastings felt it was critical to stay in their good graces, so he shocked employees after 10 months of development by killing the project and spinning off the team that created the player into a separate company, as well as being an early investor.