Netflix

Netflix began as a DVD-by-mail rental company and developed a subscription model that removed per-rental late fees. Reed Hastings and Marc Randolph founded the business in Scotts Valley, California, in 1997; the service initially relied on physical discs sent through the postal system.² A recommendation system and a large rental catalog helped distinguish it from traditional video-rental stores.

The company introduced internet streaming to subscribers in 2007, gradually making it the central part of the business. Netflix separates the cost of content from the cost of delivery: it licenses programming, commissions or produces titles, operates a streaming platform, and charges recurring subscription fees. Advertising-supported plans, introduced in selected markets in 2022, added advertising as a second major revenue source.³

Netflix became a global streaming platform by combining a common technological service with regionally varied catalogs. It expanded broadly outside the United States in 2016, although licensing rights, censorship rules, release schedules, and language availability differ by country.⁴ Subtitles, dubbing, and local production have supported this international strategy.

Its original programming includes scripted series, films, documentaries, comedy specials, reality programs, and animation. Productions such as House of Cards, Stranger Things, The Crown, and Squid Game helped establish Netflix as both a distributor and a studio. The company’s commissioning model often gives creators access to worldwide distribution, while its ownership and licensing arrangements vary by title and territory.

Netflix’s service depends on internet video delivery, adaptive streaming, and software that selects an appropriate picture quality for a viewer’s connection and device. Much of its traffic is delivered through Open Connect, a content-delivery system that places Netflix servers within or near internet-service-provider networks.⁵ The platform also uses viewing behavior, title metadata, artwork, and testing to personalize recommendations and presentation.

Competition extends beyond other subscription video services. Netflix competes for household attention with broadcast television, cable, cinemas, video-sharing platforms, social media, games, and piracy. The company has also expanded into mobile games and live programming, while restricting account sharing outside a subscriber’s household in many markets. These initiatives seek to increase engagement and make subscriptions more valuable.

Netflix’s physical-DVD business continued alongside streaming for many years and ended in the United States in 2023, closing a rarely remembered chapter of the company’s history.⁶ The original DVD operation also influenced the company’s culture of experimentation: Netflix publicly sponsored the Netflix Prize, a competition that encouraged improvements to movie-rating prediction and became a notable episode in applied machine learning research.⁷

The company’s international catalog is not simply a translated American library. Netflix has invested in regional industries including Korean, Spanish, Indian, Japanese, French, and Scandinavian production, allowing locally made titles to reach audiences far beyond their home markets. At the same time, rights fragmentation means that a title available in one country may be absent in another. Netflix’s influence therefore rests on both global scale and carefully managed regional differences.

Streaming

Delivering audio or video over the internet for near-immediate playback rather than requiring a complete download first.

Subscription video on demand

A service model in which viewers pay a recurring fee to access an on-demand catalog.

Content delivery network

A distributed network of servers designed to deliver digital content efficiently to users in different locations.

Original content

Programming commissioned, produced, co-produced, or exclusively distributed under a service’s own business arrangements.