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Daniel, Serena, and Victor

Page history last edited by Daniel Preston 9 years, 3 months ago



By Dan Preston, Victor Ngo & Serena Sharma


-What Is Netflix?-


     Netflix is a company that started out small in Scotts Valley and slowly started to progress as a major name in the video rental industry. With over 20 million subscribers they offered their customers DVD and blu-ray by mail as well as the options to stream movies and TV shows directly into one's home. 



   Netflix was founded in Scotts Valley, California in August of 1997 by Reed Hasting and Marc Randolph. Hasting had reportedly hit upon the idea for rental by mail when he was forced to pay $40 in fines after returning an overdue videotape of the film Apollo 13. In 1998 Netflix started allowing people to rent and buy DVD’s online. They got a remarkable promotional boost in September 1998 when it made 10,000 copies of a DVD of President Bill Clinton's Grand Jury testimony in the Monica Lewinsky affair (Funding Universe, 2004).  In September of 1998 Netflix introduced the subscription plan and they introduced a new service, the Marquee Program, which allowed members who paid $15.95 per month to pre-select four DVDs, with no late fees or no due dates.  In the year 2000, Netflix signed a revenue sharing agreement with Warner Brothers Videos and Columbia Tristar which gave Netflix better prices on large quantities of DVDs. They went public in 2002 and they hit the one million subscribers mark in 2003.

     [Reed Hastings, Netflix founder and CEO]                   [Netflix Headquarters in Los Gatos, Ca]



-What Can Netflix Offer You?-


     A fifth of all Americans are consuming the internet by watching Netflix on demand (Kang 2011). “Netflix is the world’s largest video and television episode rental subscription service, having pioneered the model and charging customers a flat monthly rate fee for unlimited rentals without due dates, late fees, shipping fees or pay per view.” Netflix also allows one to make a list of videos they would like to see so that when one is returned the next in the line up will be shipped out with no cost for postage (Wikinvest 2010) The company has found ways to find affordable and convenient way of delivering video streaming to customers. Consumers are more willing to give a product a chance when it is physically available at ease like on the computer, game consoles, and slowly mobile devices (Fox 2006). 


     The cost to use Netflix is $7.99 per month for only online video streaming, $9.99 per month plan allows one video at a time and video streaming via their computer or Netflix ready devise, and the $14.99 per month can allow two videos in possession along with online video streaming, $19.99 per month allows for three videos in possession along with video streaming and an additional $2 towards the package amount for blu-ray disks (Netflix 2011). CEO Reed Hastings  said in late 2010, “In fact by every measure, we are now primarily a streaming company  that also offers DVD-by-mail” (Abell 2010).


            [Netflix DVD envelopes ready to be mailed out]                                     [The Netflix "Cycle"]



-Device Support-


     When Netflix started offering their DVD-by-mail subscription service in 1999, they were already looking toward the future and streaming media.  Netflix CEO Reed Hastings predicted in 1997, when the company was just being formed, that in the future he would never have to physically deliver a movie again. He stated that if had been his intention of only delivering movies via the postal service, he would not have named the company “Netflix”, rather “DVDs by Mail” (Roth, 2009).  In 2007, Netflix developed its own set top box with the capability to stream movies directly to your living room.  The box was “killed” by Hastings only weeks before it was to be released.  Hastings decided that it would be easier to integrate streaming services into existing products (Roth, 2009).  In May of 2008, the first set top box allowing “Netflix Instant Streaming” went on the market.  Manufactured by Roku, it was capable of streaming unlimited movies and TV shows for just $7.99 a month (Netflix, 2008).  With the popularity of the Roku box skyrocketing, Netflix quickly began to integrate their technology with game systems, HDTV’s, Blu-Ray players, and even mobile devises.  Below is a list of the devises that support Netflix instant streaming.



                                        [Some Netflix ready devises]


          -List of Netflix Capable Devices-


     Apple iPad, iPhone, iPod Touch, Apple TV

     Boxee Box set-top box

     Insignia Blu-ray Disc players and home theater systems

     LG Electronics Blu-ray Disc players, TVs (LH50 series LCD and PS80 plasma), and home theater systems

     Logitech Revue Google TV Buddy Box

     Microsoft Xbox 360

     NintendoWii and Nintendo 3DS

     Panasonic Some Blu-ray Disc players, televisions and home theater systems

     Philips Some Blu-ray Disc players and TVs

     Popbox set-top box (announced)

     Roku set-top box

     Samsung Some Blu-ray Disc players and home theater systems

     Seagate FreeAgent Theater+ HD Media Players

     Sharp Some Blu-ray Disc players

     Sony Blu-ray Disc players, TVs, Google TV devices, and PlayStation 3

     TiVo DVRs (HD, HD XL, Series3™, Premiere and Premiere XL boxes)

     Viewsonic VMP75                                                                                                                  

     Vizio Some Blu-ray Disc players and TVs                                                                                                                                                                   [Courtesy of Dealbook and the NY Times]

     Western Digital WD Live plus Media Player

            ("Netflix", 2011)




     Since Netflix started offering DVD’s by mail in 1999 there have been a slew of competitors trying to catch up.  Blockbuster Video, the United States largest video rental chain has by far been the main competiton for Netflix.  The main service that Blockbuster offered that Netflix did not was the ability to change your movies at an actual store, as well as online.  The two companies had about an even race until 2008, when Netflix introduced “Instant Streaming” to media devises (Dealbook, 2011).  In 2010 Blockbuster Video declared bankruptcy and in February of 2011 put out a “preliminary bid to sell itself — for $290 million, as part of a plan to more quickly exit bankruptcy” (Dealbook, 2011).  Ironically, back in 2000, Netflix offered to sell itself to Blockbuster for a mere $50 million, Blockbuster refused the offer.



                                                                                                                          [Consumer Reports takes a look at Netflix and Blockbuster]


-Finance & Revenue-


     According to Fritz, the owner of Netflix, “Hasting’s 2010 compensation doubled to $5.5 million in 2010.” The company is slowly on the rise to become a well known mogul with stock prices going up 219% to make each share worth $175.70 with new customers constantly flowing the revenue has also increased by 29% and creating a net income of 161 million ( Fritz 2011).


During the first quarter of 2011 researchers believe that the stock price of a Netflix share will increase by a $1.07 (Wilkerson 2011). Though the company has been making impressive earning so far during the quarter, investors don’t feel the same way. The company was shy of 4 cents that expected with $1.15 per share earning (Wilkerson 2011).

          Click here to see the current share value of Netflix stock


-Going International-


     Netflix had operated only within the United States up until 2010, when CEO Reed Hastings announced that Netflix would start offering Instant Streaming to Canadian customers in fall of 2010 (Netflix, 2010).  Reed stated that "For now, we're focused on Canada…if we succeed…in Canada, we will certainly look at other markets” (Reisinger, 2010).  In 2004, Netflix had planed to spread to Europe but the expansion was canceled so they could focus on the needs of U.S. users. The company expects to grow by word of mouth as well because after a certain amount of people start popularity of a product the it is likely to succeed. So as long as the company keeps coming up with different ways to keep their customers happy then most likely success with stick with them (Begurisse et al 2010).


     [Netflix expanded into Canada in 2010]


-Legal Issues and Controversies-


          Frank Chavez Vs Netflix


     On September 2004, Netflix was sued by Frank Chavez because Netflix was telling their customers that they have unlimited rentals with one day delivery. The lawsuit became a class-action with many unhappy customers. The lawsuit took place at the San Francisco Superior court. In October 2005 Netflix put out a press-release telling their customers that if they were a Netflix members before January 15, 2005 they would be able to renew their subscriptions with a one-month free membership but there is catch as the article by Candace Heckham stated, “However, if customers receiving the freebies do not cancel the upgrades or services before the end of the month is up, Netflix would begin charging them for the extra services (Heckham, 2006).  In the final settlement, Netflix denied allegations of any wrongdoing and it changed the wording of their “Terms of Use”. Netflix estimated the settlement cost about $4 million, which included up to $2.53 million covering plaintiff lawyer fees as stated by Wikipedia article on Netflix (Netflix, 2011).




Abell, J. (2010 October 21). Netflix Instant Accounts For 20 Percent of Peak U.S. Bandwith Use. Wired Magazine. Retrieved from http://www.wired.com/epicenter/2010/10/netflix-instant-accounts-for-20-percent-of-peak-u-s-bandwith-use/


*Begurisse, M., Porter, M., & Onnela, J. (2010). Competition for popularity in bipartite networks. Communication Studies 20, 4-12.


Dealbook, (2011, Feburary 24). Blockbuster’s fall and netflix’s rise, in pictures. New York Times. Retrieved from http://dealbook.nytimes.com/2011/02/24/blockbusters-fall-and-netflixs-rise-in-pictures/ 


*Fox, M. (2006). Introduction to special issue # 6: Commercial application of the internet. First Monday. Retrieved from http://firstmonday.org/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/1578/1493



Gustin, S. (2011, April 25). Netflix profit up 88 percent, but shares fall 5 percent. Wired Magazine. Retrieved from http://www.wired.com/epicenter/tag/netflix/


*Hilderbrand, L. (2010). The art of distribution: video on demand. Communications Studies, 64, 24-28.


*Hua, Z., Lange, K. (2009). Rating movies and rating the raters who rate them. Communication Studies 63, 297-307.


Kang, C. (2011, March 6). As telecom industry evolves, success of Netflix is its biggest threat. The Washington Post.Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2011/03/05/AR2011030504225.html?sid=ST2011030600193


*Madden, M., Smith, A. (2010). Background information and a note about methodology. Reputation Management and Social Media, Retrieved from http://www.pewinternet.org/Reports/2010/Reputation-Management.aspx


*Nan Chao , C.N., Mockler, R.M., & Gartenfeld, M.G. (2010). Movies: download vs. rental. Review of Business Research , 10(1), Retrieved from http://library.calstate.edu/sanjose/articles/record/bth-52424035


Roth, D. (2009, September 21). Netflix everywhere: [S]sorry cable, you're history. Wired Magazine, 17(10), Retrieved from http://www.wired.com/techbiz/it/magazine/17-10/ff_netflix


*Sullivan , R.S. (2010). The rental epidemic of the twenty-first century: a look at how netflix and redbox are damaging the health of the hollywood film industry and how to stop it. Loyola of Los Angeles Entertainment Law Review, 20(2), Retrieved from http://web.ebscohost.com.libaccess.sjlibrary.org/ehost/detail?sid=5e59ea6b-8896-49ae-a9dc-f8e7aa918ef7%40sessionmgr114&vid=1&hid=122&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=f3h&AN=59831533



-Other Sources-


Fritz, B. (2011, April 20). Netflix chief executive Reed Hastings' compensation doubled to $5.5 million. The Los Angeles Times. Retrieved from http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/04/netflix-chief-executive-reed-hastings-compensation-doubled-to-55-million.html?cid=6a00d8341c630a53ef01538e040b7097


Funding universe. (n.d.). Retrieved from http://www.fundinguniverse.com/company-histories/Netflix-Inc-Company-History.html


Heckman, C.H. (2006, January 9). Seattle pi. Retrieved from http://www.seattlepi.com/default/article/FTC-objects-toNetflix-settlement-1192221.php


Netflix. (2008) Netflix teams with streaming media innovator roku on player that instantly streams movies from netflix directly to the tv. [Press Release] Retrieved from http://netflix.mediaroom.com/index.php?s=43&item=272


Netflix. (2010) Netflix to launch canadian service for streaming movies and tv episodes later this year.  [Press Release]  Retrieved from http://netflix.mediaroom.com/index.php?s=43&item=363


Netflix. (2011, April 27). Retrieved from http://en.wikipedia.org/wiki/Netflix

Reisinger, D. (2010). Netflix service might expand beyond canada. The Digital Home, Retrieved from http://news.cnet.com/8301-13506_3-20017485-17.html?tag=mncol;title


Tim, A. (2010, November 24).Netflix’s move onto the web stirs rivalries. Retrieved from http://www.nytimes.com/2010/11/25/business/25netflix.html


Wilkerson, D. ( 2011, April 21). Netflix expected to post strong earnings. Market Watch. Retrieved from http://www.marketwatch.com/story/netflix-expected-to-post-strong-earnings-2011-04-21?link=MW_latest_news







Comments (18)

jt_thizzle@... said

at 9:14 am on Apr 21, 2011

Good job guys, I have been hearing and following your guy's page like Twitter. keep up the good work, I cannot wait too see the final

uismiguel@... said

at 2:55 pm on Apr 21, 2011

Even thought we are working on the same project, i think you guys have a powerful information, and i liked some pictures you got there, they look neat. I hope things go well, and i am ready to see how it is going to look the main project.

Jay Barton said

at 11:03 am on Apr 27, 2011

Looks great Guys!As I said on Luis' Netflix page, I recently signed up and have instantly become a fan of Netflix. It has turned my PS3 into my families' entertainment mecca for sure. All the movies you want for $8 a month...heck ya!I noticed ya'all put the Wii menu on here...does it really run faster and deliver a better pic quality than on the PS3 as I've heard? Well put together so far, can't wait to see the finished product.

Jenna Saenz said

at 4:33 pm on Apr 27, 2011

Awesome progress yall! Lots of my friends have Netflix! I havent decided if Im going to join them just yet :)

uismiguel@... said

at 3:43 pm on Apr 28, 2011

You guys did a great job here, and i think it seems more complete than mine.. good job guys.

Mark Francis said

at 3:53 pm on Apr 28, 2011

For habing three people I think you need three times the sources and three times the words (3000). Just a heads up, unless your in progress right now then ignore this. Goodluck!

Justine Cranford said

at 10:59 pm on Apr 28, 2011

Very good job. You guys have a killer amount of sources and I look forward to your presentation.

Bobby Menbari said

at 11:15 pm on Apr 28, 2011

You know someone else did this topic too. Nonetheless...good job!

Adrian Aujero said

at 12:02 am on Apr 29, 2011

I remember going to blockbuster, trying to find vhs movies and waiting in line and driving home to watch my movies. I kinda miss it.

dbooth said

at 12:32 am on Apr 29, 2011

I love Netflix it makes things so easy for us lazy people, and forgetful people. Redbox you might forget you have the DVD and end up spending an extra three dollars on it. Neat page, must of been tough getting all that information between three people.

Juleane said

at 10:42 am on Apr 29, 2011

NETFLIX RULES!!!! Again with learning something new everyday, I cannot believe Netflix offered itself to Blockbuster and they declined, someone somewhere must be pretty pissed about that decision...buying out your competition is considered a good thing right? Well, there is no competition now because Blockbuster and the whole idea of having "your neighborhood video store" is pretty irrelevant nowadays with watching movies online, redbox, and Netflix. The whole way we even watch movies and interact with films has changed.

Very well done and very well put together and well organized with well placed and greatly used multimedia components. So overall great presentation!!

reilingss2b7@... said

at 6:43 pm on May 2, 2011

good job guys, my mom recently discovered netflix so its cool that you researched this, at my house we have new movies every day! too bad blockbuster and hollywood video are under.

dbooth said

at 12:47 pm on May 3, 2011

Who would have imagined there was so much information just on Netlifx alone. Good page, I look forward to seeing how the presentation will counter or expand on what we learned from the class today. I did have one thing I was unsure of, is whether there was a difference between "devices" and "devises". In your wiki you wrote it as "devise" and traditionally I'd seen it written as "device" so I Wasn't sure if that was something that was just me being not too familiar with netflix and the topic. I do love the amount of documentaries and interesting movies Netflix has that I normally wouldn't bother watching.

Aubrey Lee said

at 12:48 pm on May 5, 2011

Hey guys!!! Nice job presenting today. It was nice having two different groups doing the same topic because we could compare and contrast and you guys also provided a lot of new information. Its funny reading about Netflix because I did my Wiki on Hulu and I did a compare and contrast. And even tho I am all about Hulu, Netflix outweighed it in many aspects. O blame it on the fact that its been around for a lot longer. But Hulu will catch up, just wait! :) haha But nicely organized page and good information. The video streaming sites seem to be taking over!!!

uismiguel@... said

at 7:28 pm on May 8, 2011

You guys did a good presentation, i liked the way you went more in depth on Netflix and the way you explained. You provided a lot of details that i missed, and now we all know what Nerflix is and its funtion..

Lena Zubaid said

at 12:24 pm on May 9, 2011

Daniel, Serena, and Victor, Netflix and something very common. Apparently you guys were not the only people who chose this topic and that kind of gives you guys a challenge to do better or write more. I really like your wiki; you guys included a lot of things about Netflix, its history, how it started, where it is now, and where it is going. That is very important when writing about a topic. I feel like it is hard to write simple basic things about a topic where everyone knows about it and knows all the information provided yet you still have to include it. Good job of doing that.

ericadeguzman@yahoo.com said

at 9:09 pm on May 10, 2011

Well done guys! I used to be a member of Netflix till about a year ago. It really is a convenient service but sometimes I just find that I don’t really have the time to sit and watch a movie.. and I know you guys did explain that members can hold on to movies for as long as they’d like/need to, but I just figured I didn’t want to keep paying for a service that I wasn’t really using. When I find the time though I’ll definitely reactivate my account, especially now that they stream movies and are broadening their streaming library. Also, something that I figured out, for streaming videos you can always just use a friends account to watch movies and not necessarily have to have an account of your own. Haha. Anyway, great wiki and I’m glad you guys were able to come together to complete it because I know sometimes groups projects can be a real pain in the butt!

Jay Barton said

at 10:30 am on May 11, 2011

*In Addition to Comments Above*
You three did a great job on your presentation. Between your wiki and Luis', I've learned a ton about Netflix. I saw a Netflix movie on the Wii and the quality wasn't as good. I'm glad I run the better processor in my PS3, cause it definately matters. Anyway, good job this semester on everything and have a great summer you guys.

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