For decades, the movie business had a standard of how we consumed entertainment — until Netflix came along. In this article, we unpack the MASSIVE impact this streaming giant made on the film industry… 

Can you imagine paying every time you want to see a new movie at home?

Believe it or not, that’s how the world was BEFORE Netflix was available. 

Back then, you had to drive to a video store…

Grab a copy of the movie — if they had it….

Pay $5 to take it home to watch…

Then, you’d have to cough up more cash if you didn’t bring it back in a few days!

IT WASN’T EXACTLY CONVENIENT. 

These reasons influenced Reed Hastings and Marc Randolph to create the home movie rental business, Netflix. 

Well, those reasons and a misplaced “Apollo 13,” videotape. 

At least, that’s how one cofounder’s story goes… 

The TRUTH Behind Netflix’s Origins

As the movie service started making waves, the public wanted to know where the founders got the inspiration for the venture. 

Initially, Reed Hastings told a colorful tale about how he had lost a copy of “Apollo 13” he rented. He reported that this mistake resulted in owing $40 in late fees to Blockbuster… 

At the time, Hastings claimed this incident was the catalyst for Netflix. 

However, the second cofounder, Marc Randolph, revealed that this account was a “convenient fiction” to CNBC in 2017…     

SO, WHAT IS THE FACT BEHIND THE “CONVENIENT FICTION”?

Randolf says the real backstory starts with two carpooling buddies brainstorming business ideas on their way to work. 

Marc and Reed wanted to start the next big thing but weren’t sure what at first. 

“WE WANTED TO BE THE AMAZON OF SOMETHING,” MARC RANDOLPH RECALLS.

The entrepreneurs wanted to apply the Amazon business model to video rental but had a problem — logistics

VHS tapes were large and bulky. Therefore, it was too expensive to execute a mail-order movie service. 

But in 1996, new technology gave way to opportunity… 

Movies moving to the DVD format was crucial to Netflix becoming a successful business. DVDs were light, easily shipped, and took less space to store than tapes. 

Randolph and Hastings didn’t know if DVDs’ would be popular. But they took a risk in hopes of becoming, “the Amazon of movies.” 

Netflix officially opened its online doors in August of 1997 and the movie service was well-received…

Eager customers crashed the company’s website shortly after its initial launch!

Despite the public interest, the enterprise didn’t turn a substantial profit for many years. For Netflix to be successful in the movie business, they had to change it completely… 

People Want Movies NOW — Not Later

Through key partnerships — such as with Amazon and DVD player manufacturers — Netflix grew steadily over time. Nonetheless, they wanted to get their products to consumers faster and at a lower cost… 

THE SOLUTION WAS THE INTRODUCTION OF ONLINE MOVIE STREAMING IN 2007.

Aside from the convenience, the Netflix founders had no idea how this would disrupt the way the movie business operated.

Streaming had distinct advantages for the viewer, such as:

  • Watch when you want. 
  • Continue as long as you want —no waiting between episodes.
  • View where you want.

Suddenly, people had the choice to stay in and enjoy a library of films and TV shows easier than ever before. 

And, Netflix was how you could do it.

For the first time, the movie business had to scramble to keep their lion’s share of the market…

Movie Business Shifts Due to Netflix

In the beginning, the movie business was not threatened by Netflix — then the 2020 pandemic hit…

Movie-goers couldn’t go to theaters; and even once restrictions were lifted, audiences preferred to stay home

As a result, the film industry has taken the “if you can’t beat them, join them,” approach to competition. 

Corporations such as HBO, Disney, and ESPN have developed their own streaming services to lure viewers away from Netflix. 

Now that Netflix and its competitors both have streaming capabilities, they use content to win over viewers. 

IN THIS MODEL, WHOEVER HAS THE HOTTEST SERIES OR FILM WINS THE DAY. 

To conclude, Netflix has revolutionized the movie business so it will never be the same again.  

The founders took risks, duplicated successful methods, and committed to serving their customers. 

And, these practices paid off for them and for us… 

We don’t even mind the fib about the lost VHS tape. 

— GCTV Staff

If you want to hear more from Marc Randolph about Netflix and entrepreneurship, he will be speaking at the 10X Business Summit. 

Register for FREE here. 

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