A company that has gone into international markets in recent years is Netflix. Netflix is a DVD rental and movie streaming company that is widely popular in United States. It almost single handedly brought Blockbuster to bankruptcy in 2010. Netflix was founded in 1997 in Scotts Valley, California. It was founded by friends Marc Randolph and Reed Hastings, who got the idea when he realized he owed $40 on an overdue movie he had borrowed. Hastings is the CEO. They were both part of the company Pure Software. When they started in 1998, the only had 30 employees.
Netflix really cashed in on the rise of the DVD, which can store a high-quality copy of an entire feature film on a single five-inch disc. Majority of the Blockbusters at the time didn’t have DVD’s available to rent. Although at the time few people owned DVD players, Hastings and Randolph could see had the potential to replace bulkier, lower-resolution VHS as the main format for movies. Netflix took advantage of the small size and lightweight of DVD’s, which could be shipped to users very cheaply. They could be sent for the cost of a single first-class stamp. A stamped return mailer was also enclosed.
In September of 1999, NetFlix introduced the Marquee Program, which allowed members who paid $15.95 per month to pre-select four DVDs, with no late fees or due dates. Customers could also rent new discs each time they returned one. By this time, they had 10,000 orders processed each day. Even though their popularity was greatly increasing, in1999 the company reported losses of $29.8 million on revenues of only $5 million. NetFlix was spending a lot to entice customers to its Web site, hoping that they would become very profitable after becoming solidly established. This is the risk all Internet start-ups take.
Netflix got popular by advertising on Amazon and making a deal with Bestbuy to recommend them to people in their stores. Although their popularity was at an all...