Netflix’s success can be attributed thinking big and starting small. Although Netflix started off mailing DVD’s, its founder Reed Hastings’ forward thinking allowed him to get a jump on his competitor. Hastings was ahead of the technology curve, and revolutionized the industry. He looked at the future of in-home entertainment and delivered a method by which movie buffs could view movies anywhere and anytime. Unlike its chief competitor, Blockbuster, Netflix hit the market with a much more efficient way of providing the in-home entertainment consumer access to his passion. Netflix’s strategy for building a bigger subscriber base was providing a larger selection of movie choices, fast, efficient delivery, no due dates for return, and convenient prepaid mail returns. The company was able to provide all the above by incorporating a Just in Time inventory system. Netflix saved money by buying rights to movies and ensuring that tech support was available to monitor servers. Part of Netflix’s technology strategy was avoidance of the burden of retail outlets by operating online. With only a few warehouses and offices, the company became a virtual organization with no retail stores and no sales employees. A small staff operates on what Hastings calls their “Freedom and Responsibility Culture.” Instead of authorized vacations, sick days, and fixed work hours, people work when they choose to as long as the job gets done. Titles and compensation are left to the individual employee. Although, the company still provides a DVD mail service, the majority of its revenue is generated by online streaming.
Even though Blockbuster was at the leading edge of DVD rental, no one had cornered the market on streaming movies. Streaming for Netflix was not an overnight success. Founder Ned Hastings ran a lot tests to determine how much bandwidth would be needed to provide the service. He also made a lot of deals with content providers in order to determine which would work this all took place over a span of 10 years. He also considered numerous pricing models for streaming, ultimately deciding to give it away as part of DVD subscriptions. That way, people could get used to streaming while he built his library of offerings. With this methodology he didn’t create an opening for a competitor. Hasting’s approach to video streaming was a bit unorthodox. He took it a step further and allowed his customers to order new show episodes online by the bundle, thus viewers wouldn’t have to wait for the next chapter of a series. Like most innovators, his methods were criticized by both competitors and suppliers.
Hastings also cut new deals with TV networks which allowed their content to appear on Netflix a