Reed Hastings founded Netflix in 1997 after being charged a $40 late fee on a movie rental. He saw an opportunity to create a DVD rental service that mailed discs to customers' homes with no late fees. Netflix started as a pay-per-rental business but found greater success with a subscription model. In 2005, Netflix launched streaming video and now offers over 90,000 titles for streaming online and through devices like Xbox and Blu-Ray players. Hastings' innovations with Netflix's business model and its early adoption of streaming have transformed movie and TV content delivery.

1. Reed Hastings: ¡Padre de
Netflix!
Josh Jacobson

2. The Genesis of Netflix
1997: Reed Hastings forced to pay a $40 late fee for a VHS
of Apollo 13
Hastings decided that there could be a market for DVD
rentals by mail with no late fees
Hastings founded Netflix in 1997, providing a new
alternative to movie rental stores

3. The Subscription Model
Netflix started out with a pay-per-rental business model,
similar to that of current movie rental stores
Netflix had only limited success at first with this business
model
When Hastings decided to make the risky move to a
subscription-based business model Netflix's popularity
exploded
1999: Netflix launched an internet-based subscription
service, signing up 239,000 subscribers in the first year

4. Reasons for Hastings' success
Netflix's subscription model offers customers unlimited
DVD rentals for a relatively low monthly rate
Since the vast majority of Netflix subscribers don't watch a
lot of movies, Netflix can afford to offer customers
unlimited rentals for the same price as 4-5 rentals from
Hollywood Video or Blockbuster
As a result, even though Netflix's average cost per
subscriber is less than 1/4 of the subscription price, Netflix
is technically offering customers a service worth far more
than the subscription price

5. Netflix Instant Streaming
When Hastings formed Netflix in 1997, he predicted that
someday movies would be delivered through the Internet
rather than by mail
There was a reason why Hastings named the company
"Netflix," not something like "DVD's by Mail"
In 2005, Netflix launched Instant Streaming
Offers customers unlimited instant streaming at no
additional charge
Library of over 90,000 titles, a selection with which
cable Pay-Per-View can't compete
With Xbox and Blu-Ray players, Netflix offers instant
streaming (in HD!) directly to your TV

6. Netflix Instant Streaming, cont.
Netflix Instant Streaming also offers past seasons of many
popular TV shows
In the future, Netflix could conceivably become an
alternative to a cable subscription by offering current TV
shows on demand

7. Impact on Society
Hastings has effectively abolished the idea of "late fees" in
movie rentals
Netflix instant streaming represents a major step into the
future of content delivery, both for movies and for TV
Netflix is beginning to provide some competition for cable
companies, whose prices have gotten out of control

8. Hastings' Entrepreneurial Genius
Every step of the way, Hastings has planned for the future,
ensuring that Netflix would not be buried in the dust of
technological innovation
Even in 1997, Hastings knew to name the company
"Netflix," not "DVD's by Mail"
Netflix has consistently stayed one step ahead of the
competition, especially since the launch of Netflix
Streaming in 2005
Hastings' success should be a model for aspiring
entrepreneurs

9. Bibliography
Abkowitz, Alyssa. "How Netflix Got Started." Fortune 28
Jan. 2009. Print.
Hastings, Reed. "How I Did It: Reed Hastings, Netflix." Inc.com. 1
Dec.
2005. Web. 10 Feb. 2010. <http://www.inc.com/magazine
/20051201/qa-hastings.html>.
Maney, Keven. "Netflix Plans Blockbuster Future of Serving Movie
Watchers." USA Today 16 June 2004. Print.

10. Bibliography, cont.
Riley, Jason. "Movie Man." The Wall Street Journal [New
York, NY] 9 Feb. 2008, Opinion sec.: A9. Print.
Roth, Daniel. "Netflix Inside." Wired 1 Oct. 2009. Print.