Netflix, 10 Innovations That Changed the World

Since its start in 1997 Netflix has grown from a small start-up delivering mail order DVD’s to the world’s leading source of international movie streaming with more than 80.5 million members around the world, including 35 million who watch Netflix internationally. In that time the company has broken down barriers, innovated the industry and set the standard for others to follow. More importantly than that is how Netflix has changed society. The services, the personalization and the content have had an effect on how we all watch movies and TV. Now, instead of watching whatever we can whenever we can find it, going to the movies or relying on bulky tapes or DVD’s, we watch what we want when want wherever we want as often as we want. This is a look at 10 of the innovations that have changed our lives.

 

10 Ways Netflix Has Changed The Way We Watch TV:

 1. Netflix, The Original

The original concept is perhaps the biggest innovation the company has ever made. It led to the corporate giant we have today, and all the other innovations which were to follow. It is the brainchild of Marc Randolph and Reed Hastings who has remained CEO to this day. The idea came to Hastings after paying huge late fees for a movie, he wanted to provide movie rentals that were not only cheap, but easy to deal with. Randolph brought the Internet to the table. He’d worked in comparable businesses before and knew he wanted to sell something over the Internet, just not exactly what. Solution, sell movie rentals over the Internet and deliver through the mail. Together, the two men and only 30 employees began a business that drove the traditional movie rental business out of business and is forcing the modern entertainment industry to conform to a new paradigm.

They first introduced Netflix in 1998 with a pure rental model that came with the associated late fees. This was complemented a year later with the addition of the subscriber model which eventually led to the end of the original concept. Since then the company has been growing the business based on the concepts of flat fees and unlimited rentals. It wasn’t an easy ride to the top. The company wasn’t profitable until 2003, 6 years after its founding, but this was primarily due to the growth oriented strategies employed by Hastings and Randolph.

During that time Netflix was offered to BlockBuster which refused to buy, a decision that ultimately led to its demise. As early as 2005 Netflix was sending out over 1 million movies daily, a volume that Blockbuster couldn’t match. Blockbuster is still in business as a brand owned by Dish Network but it has shrunk from its peak of 9,000 stores and 60,000 employees to only about 50 stores today.

2. Netflix, The Subscriber Model

Following the origin of the company the switch to the subscriber model is the second biggest innovation made to date. Up until then movie rentals were a clunky process, even when using Netflix. Viewers had to log in, choose a title, pay for it, wait for it, watch it, send it back and hopefully not incur a late fee. Charges for movies were low compared to a rental store but still high compared to today’s on demand model, and they could go up dramatically if not returned within the time allotted. The original model allowed users to watch Netflix internationally for a low per movie charge, lower late fees and all from the ease of home but was just not enough to truly capture the eye of the market.

The switch to a subscriber model was a gamble but one that paid off. Within the first year of its launch it became clear that it was the future of video rentals and quickly eclipsed the original business model. By 2000 it was abandoned in favor of subscriptions only and that move led the company to growth and profitability. The fact that users could watch a movie whenever they wanted, as many times as they wanted, with no deadlines and no late fees was revolutionary and altered the very nature of the movie rental business.

3. The Netflix Queue

You may not think of the queue as a major innovation but it is fundamental to Netflix experience. It allows users to populate and curate a list of movies, TV shows, documentaries, cartoons and other DVD based content scheduled for viewing. The list is used to determine which movie is mailed next so users do not have to go the sometimes onerous process of choosing what to watch. Each time a movie is returned a new movie is sent out. If a movie isn’t available, the next on the list queues up for delivery. Members can add or remove movies and up or downgrade them at will, even provide feedback and ratings which are later used by the platform to suggest new titles. A basic subscription allows for one movie at a time, the next level is 2 movies at a time. Two at a time means one movie ready at home for watching and another in the mail, providing a constant flow of ready to watch entertainment.

4. Personalized Recommendation System

The business model may be subscription movie sales but Netflix is also a technology company and the product is personalization. The platform is built around a personalized move recommendation system that uses a variety of algorithms to match contents to member preferences. The system uses ratings and reviews from past viewers and to match movies to viewers based on their history and reviews. The software has been in development for over ten years, well before the company paid a $1,000,000 award to developers who were able to improve performance by 10%. The algorithms display content in two dimensions; titles are listed horizontally, genres vertically, ranked by preferences providing members a uniquely personalized experience.

One aspect of the algorithm is that it is global. It uses information from users around the world to make suggestions with no regard to gender, location or age. Suggestions are made solely on the basis of ratings of past viewers and individual viewer preferences. Each title is grouped into thousands of “clusters” based on the content, each viewer is assigned a number of clusters and these are used to match movies to members. Because there is no demographic bias suggestions are based on what other viewers of a particular video are watching, not who the viewers are.

5. The Move To Video Streaming

Netflix’ impact on how we receive our video content became more obvious with the move to streaming. When Netflix began it was a DVD rental company housing a growing inventory of movies and content. This was a big blow to the traditional movie rental businesses like Blockbuster but an inevitable change. Over the years streaming content came on the scene and the company slowly began the switch, but the changed moved into high gear in 2007 with the launch of video on demand. Within three years of the move Netflix lost its place as the US Postal Service single largest customer but became the internet’s most visited website during off-work hours. To put it bluntly, video on demand through subscription service is now the driving source of revenue and leading source of change throughout the entertainment, television and movie making industries.

In the beginning Netflix was not the only one to move into streaming, nor is it the only one today, but it is the largest and leading provider of international television streaming and other content on the planet today. This move was central to the company’s ability to grow and dominate the market.

Change did not come all at once, it almost never does. In the beginning the streaming service did not start with off unlimited access. The original subscribers to DVD services were allowed one hour of streaming for each dollar spent per month. For most this meant 17 hours, or $16.99, but eventually the cap was lifted. When Apple’s streaming service and Hulu came on to the scene the company decided the way to counter the threat of competition was to open up unlimited access for all users except those using the low cost basic $4.99/2 disc per month plan. Over time service evolved to today’s rates which run between $7 and $12, with a free trial month for all new users.

Perhaps the most compelling feature of the subscription is the ability to use multiple user profiles to access one account. Up to five profiles can be built with each subscription, from five different computers, so long as the original account has been logged into on that device. This feature is especially useful for families or roommates. The only limitations to international Netflix streaming is copyright, local and international law blocking certain content in certain areas. The sad truth is that not all content is allowed in every country, or provided through Netflix, and are blocked. You could unblock shows using VPN for Netflix but that is getting harder to do.

6. Exclusive Content And Original Programming

No matter the model or service Netflix has always been about delivering content. In order to do this it has cultivated a vast library built on exclusive deals with many of the top entertainment companies. Over the years the company has made deals with Starz!, Metro-Goldwyn-Mayer, Paramount, Lionsgate and many others allowing it exclusive access to popular movies not available anywhere else. Their dominance of the market led to intense competition for content and the birth of original programming.

Netflix innovated the concept of exclusive content when it started to buy, and then develop, its own original programming. At first criticized for their unorthodox methods the company has proven its ability to produce new shows cheaper than mainstream media and deliver it in a fashion that meets viewer demands. By crossing the line between rental service to entertainment provider the company further cemented a loyal fan base by increasing appeal. The first project, House Of Cards, was first aired in February 2013 and has been followed by dozens of new shows. Partnerships with companies like Dreamworks Animation and Marvel TV have also helped Netflix in its quest to produce original content exclusive to its membership. Season 2 of Daredevil, a result of the partnership with Marvel TV, launched in early 2016 in 190 countries simultaneously, yet another milestone.

7. Global Reach, Unlimited Access

When it comes to unlimited access Netflix takes it to the next level. The full library is available to most members with some limitations due to legal restrictions in some areas. Because it is web based and streaming members can stream content from anywhere in the world they can get access to the Internet. On top of that, the platform works on nearly every device on the market today.

Netflix partnered with multiple device makers to make its services available to the most number of people in the most number of ways. Makers of set-top boxes like Roku, blue-ray players, smart TV’s, game consoles like X-Box, PlayStation and WII and many others with internet connection all support Netflix apps. This allows members the most flexibility, and to stream movies and shows directly to their computers, tablets, phones and most importantly, to their TV’s. The number and types of devices makes it easy for viewers to watch Netflix internationally from anywhere in the world.

8. Binge Watching

Binge watching, it’s a buzz word in today’s world and a practice most of us have likely taken part in, even if you don’t admit it. The word sprang into common use in the wake of Netflix foray into the world of serialized TV. When Netflix began listing whole seasons of television series at once it allowed viewers the opportunity to watch as many episodes at a time, at any time on demand, as they liked.

According to a survey conducted by Netflix more than three quarters of all respondents say that binge watching is watching 2 to 6 episodes of a show at one sitting, more than half say they binge watch regularly. For many this can go much higher. When there are multiple seasons available it is possible to watch the same show for days at a time, only stopping for sleep.

In reality, binge watching originated with broadcast and cable TV in the form of marathons. Marathons allowed viewers to watch multiple episodes in a row and often were aired by season, or with some other theme applied. The term was later applied to VHS and DVD viewers doing the same at home. Its use grew with advent of streaming and on-demand video and became widespread with the release of shows like House Of Cards and Orange Is The New Black.

9. Changing The Entertainment Industry

One benefit of the subscription model for both the company and viewers is the lack of commercials. Since the company does not need to raise revenue from ad sales it saves money by not needing to run an ad sales department and viewers gain the benefit of commercial free viewing. While the obvious affects are enjoyable enough, several unintended affects are altering the very fabric of the entertainment industry. One is that content creators are no longer tied to the 30-minute/60-minute time frame of traditional TV another is that they no longer need to write in a format assuming weekly viewing.

The change in how content is created, how it is delivered and how the viewer consumes it is forcing other industries to change too. As Netflix grows in dominance cable, TV and movie companies are all having to make changes to keep up. Not only are cable companies forced to fight for rights to content, they must create new content and deliver to the consumer in the way consumers now demand, on demand. Think about it, just about every source of media has a website streaming its content where just a few years ago the space was nearly vacant.

Further, releasing entire seasons in blocks allows the company to save money where other content producers cannot. The traditional method of launching a show involves pilots, of the hundreds of pilots made each year only a dozen or so become shows and many of those fail in only a few years. Netflix seeks out compelling content and contracts it for an entire season. It dispenses with pilot process, favoring its own data in terms of what execs think will drive viewership.

10. The Latest “Innovation”, Blocking VPNs

The latest innovation, and one that has garnered a lot criticism from Netflix users, internet advocates anyone that use VPN for streaming, is a move from Netflix blocking VPN’s. The reason? Due to local and international law, copyrights and censorship not all content is available worldwide, VPNs help members evade these restrictions. VPNs and other services block or alter a computers IP address and country ID so that users can gain full access to online content.

As early as February of 2016 most of the VPN services began reporting blockages that eventually led to many of them refusing access to Netflix altogether. Netflix VP David Fullagar summed it up nicely when he said “”If all of our content were globally available, there wouldn’t be a reason for members to use proxies or unblockers”.

One criticism of the blockade is that it will push more people into pirating content. Another is that web developers and hackers will only find new ways to get around the blockade. One service, Le VPN, was amongst the last ones standing up against the blockade and it was up and running for Netflix users around the world until October 2016. Le VPN is a service that helps viewers unblock TV shows from around the world, not just from Netflix, and access international television streaming with just one click.

Netflix has grown from a small tech start-up to a company changing the world through innovation. Its original programming, exclusive content and international Netflix streaming make it the most popular international movie streaming service worldwide. It counts 80.5 million subscribers around the world as reported in April 2016, and its popularity keeps on growing. Over 35 million people watch Netflix internationally outside of the US and many of them use a VPN for streaming without restraints and accessing the numerous Netflix libraries in other countries. Learn more how to use a VPN to unblock TV shows and how Le VPN can help you bypass all restrictions and watch online media content from around the world.

*Article updated on July 20th, 2018.*