Internet Protocol. Based on computers and based on software. Five million viewers subscribe to Hulu Plus, which, for eight dollars per month, offers more current content and past shows, on multiple devices and with fewer commercials.
Last year, Hulu began to invest modestly in original programming. The television industry has fared better than music and newspapers in part because its factions are dependent on one another for revenue, and none are eager to see the others vanish. Broadcast television has lost viewers to cable networks but syndicates programs to them to rerun.
Cable systems battle with broadcast TV over retransmission fees but need access to its programs. All are wary of Netflix but welcome either the licensing fees or broadband customers. Hastings grew up in Cambridge, Massachusetts, where he attended private schools, then got an undergraduate degree in math at Bowdoin College, in Maine. He now lives in Santa Cruz with Quillin and their two teen-age children. They have four shelter dogs, and, in the back yard, four goats and ten chickens.
He is involved in various philanthropic ventures that promote charter schools and education reform. To manage the technical aspects of the Web site, he recruited Neil Hunt, another mathematician and former colleague. In , Hastings hired Ted Sarandos, who had been the vice-president of product and marketing for West Coast Video, a Blockbuster-like company with nearly five hundred stores.
Sarandos had a deep knowledge of movies and television shows and began to broaden the range of material that Netflix made available. In , the company turned profitable and went public.
Hastings pressed his team to begin streaming movies and television shows over the Internet. The film industry, worried about digital piracy, initially resisted licensing its content to stream; and Netflix lacked access to recent movies, because the studios had exclusive long-term deals to sell them to HBO and other cable subscription channels such as Starz.
Finally, in , Netflix made a deal with Starz to stream the movies it had acquired. Starz and other content providers realized that Netflix offered not only a new source of revenue but also a way to build audiences for current broadcast and cable shows, by allowing Netflix subscribers to watch prior seasons. Media executives dismissed the notion that Netflix was a threat.
In , Jeff Bewkes, the C. For the next year, I wore Albanian Army dog tags around my neck. It was my rosary beads of motivation. Hastings sees his main competitors as Showtime and, especially, HBO. In the spring of , Netflix announced that it was aggressively entering the business of original programming.
The director and the actor had approached several networks; Netflix offered to approve the project without seeing a pilot or test-marketing it with viewers. How many do you wanna do? But, in September of , Hastings made a major miscalculation.
Hastings then announced that the DVD rentals would now be handled by a new entity, Qwikster. Hastings had seen how companies such as AOL had been slow to replace dial-up Internet access with broadband. Eight hundred thousand subscribers abandoned the service, and the stock price plummeted. By October, Netflix had reversed the decision to split itself into two companies. We had one hundred employees and a mere three hundred thousand subscribers and were off to a rocky start.
We all sat down around a massive glass table, and after a few minutes of small talk, Marc and I made our pitch. We suggested that Blockbuster purchase Netflix, and then we would develop and run Blockbuster. Marc and I left, crestfallen. That night, when I got into bed and closed my eyes, I had this image of all sixty thousand Blockbuster employees erupting in laughter at the ridiculousness of our proposal.
Why would a powerhouse like Blockbuster, with millions of customers, massive revenues, a talented CEO, and a brand synonymous with home movies, be interested in a flailing wannabe like Netflix?
But, little by little, the world changed and our business stayed on its feet and grew. In , two years after that meeting, we took Netflix public. Moreover, Blockbuster was owned by Viacom, which at that time was the most valuable media company in the world.
It led Hastings to think about how much data a DVD could hold and how quickly you could disseminate that information through the mail, he said. Eventually, he thought the internet would make it possible to deliver things even faster.
Hastings had always been vocal about his belief in streaming video. In an as-told-to piece for Inc. The company introduced streaming content in , just two years after the article was published. The evening before the meeting, Randolph, Hastings, and McCarthy were in rural California at Netflix's first-ever corporate retreat when McCarthy got word that Blockbuster wanted to meet with them. At the time, Netflix was in trouble.
The dot-com crash had made its once-rosy future look grim. The idea of a DVD-by-mail rental service, which was all that was possible in that era of slower download speeds, was catching on, but not quickly enough for the company to be anywhere near profitable. Two years earlier and in headier economic times, Hastings and Randolph had turned down the opportunity to be acquired by Amazon. Now acquisition by Blockbuster seemed like the perfect solution and the perfect lifeline to keep Netflix afloat.
With this in mind, Netflix executives had been requesting a meeting with Blockbuster's leadership for months.
Now word came through that Blockbuster wanted to meet them--at the following morning in Dallas which was less than 12 hours away. Let's pause for a moment and contemplate the sheer arrogance of this offer. After someone has been requesting a meeting with you for months, you finally agree to meet them at a time and place where it's physically impossible for them to get to, barring the use of a Star Trek -style transporter.
Or at least almost impossible. Hastings, who has described entrepreneurship as jumping out of a plane in the confidence that you can catch a passing bird, pointed out that they could make it if they chartered a plane for 5 a.
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