Brocker.Org: Netflix: 7 Secrets You Didn’t Know (NFLX)


Perhaps no company in recent memory has been as revolutionary at altering its industry’s landscape as Netflix Inc. (NASDAQ: NFLX). Once limited largely to cable TV service, movie rentals and VCR recordings, Netflix has helped transform the entertainment landscape to a 24/7 on-demand, internet-streamed, enormous library of content. Netflix is available in 190 countries around the world, and boasts roughly 70 million customers worldwide. While most people are no doubt familiar with Netflix and its vast array of viewing choices, here are a few facts that many may not know.

Today — May 23rd, 2017 — marks the 15th anniversary of Netflix’ IPO.

Founded as a Result of a Blockbuster Late Fee — and Still Have DVD Subscribers

Netflix CEO Reed Hastings came up with the idea after getting socked with a late fee for a movie rental at Blockbuster. Hastings was inspired to create a service devoid of late fees, and used money he received from the buyout of another software company to fund the venture. Netflix launched its first DVD rental service in 1998, which still has 4.1 million subscribers!

See related: Netflix Loses 2 Execs but Retains OTT Leadership (NFLX, AMZN)

Netflix Was Originally Called Kibble

The Netflix management team originally had some trouble coming up with a permanent name for the business. In its early days, Netflix co-founder Marc Randolph decided to call the company Kibble. It was the name that Randolph decided to use for test sites and legal documents but was not a name he wanted to use on a permanent basis. After several iterations and test names, Hastings and Randolph agreed on naming their business Netflix, and the rest is history.

Blockbuster Turned Down Offer to Buy Netflix for $50 Million

This story is not so unknown that it is considered a secret, but it is a story that is thick in irony. The company that inspired the creation of Netflix had a chance to buy Netflix outright in 2000 for the price tag of $50 million. Hastings envisioned an agreement where Netflix would act as the online complement to Blockbuster’s traditional brick and mortar model. Blockbuster turned down the offer.

Five years later, in 2005, Netflix was up to 4.5 million customers while Blockbuster was struggling to evolve in an internet economy. Blockbuster, which peaked in 2004 with almost 9,000 retail locations, began struggling mightily and filed for bankruptcy in 2010. At the end of 2015, Blockbuster operated just 51 stores, and Netflix was worth more than $40 billion.

Netflix Streams Account for One-Third of All Internet Traffic

It is likely not surprising that Netflix is a bandwidth hog. What may be less known is the fact that in many areas of the world, Netflix is the biggest bandwidth hog. By some estimates, it accounts for roughly one-third of total internet traffic during peak usage periods.

The Example Show

Netflix subscribers are likely familiar with the large library of original content that the company provides, including series such as “Orange Is the New Black” and “House of Cards.” However, the company was testing out video formats and capabilities long before any of those programs hit the streaming service. An 11-minute-long video titled “Example Show” exists that is largely uneventful and a little strange but was used by Netflix as a means of testing its ability to successfully stream high-definition content. The video is not available for streaming on Netflix, but it can be easily found on YouTube.

Use of Square Envelopes

Ever wonder why Netflix continues to use rectangular envelopes when it seems that square envelopes for DVDs would make more sense? The answer is simple. It is cheaper. The U.S. Postal Service charges more for square envelopes. With the number of discs that the company sends and receives, Netflix is able to cut costs of more than $200 million annually.

125 Million Hours a Day

It is estimated the average Netflix subscriber streams about 90 minutes of content every day. Given the number of subscribers who stream content daily, roughly 125 million hours of Netflix content is streamed every day.