Netflix
Encyclopedia
Netflix, Inc., is an American provider of on-demand
internet streaming media
in the United States, Canada, and Latin America and flat rate
DVD-by-mail in the United States. The company was established in 1997 and is headquartered in Los Gatos, California
. It started its subscription-based digital distribution
service in 1999 and by 2009 it was offering a collection of 100,000 titles on DVD and had surpassed 10 million subscribers. On February 25, 2007, Netflix announced the billionth DVD delivery. In April 2011, Netflix announced 23.6 million subscribers.
, who previously had worked together at Pure Software
, along with Mitch Lowe. Hastings was inspired to start the company after being charged late fees for returning a rented copy of Apollo 13
after the due date. The Netflix website launched in April 1998 with an online version of a more traditional pay-per-rental model (US $4 per rental plus US $2 in postage; late fees applied). Netflix introduced the monthly subscription concept in September 1999, then dropped the single-rental model in early 2000. Since that time the company has built its reputation on the business model of flat-fee unlimited rentals without due dates, late fees, shipping or handling fees, or per title rental fees.
Netflix developed and maintains an extensive personalized video-recommendation system based on ratings and reviews by its customers. On October 1, 2006, Netflix offered a $1,000,000 prize
to the first developer of a video-recommendation algorithm
that could beat its existing algorithm, Cinematch, at predicting customer ratings by more than 10%.
"Some 35,000 different film titles are contained in the 1 million DVDs it sends out every day."
Netflix has played a prominent role in independent film distribution. Through a division called Red Envelope Entertainment
, Netflix licensed and distributed independent films such as Born into Brothels
and Sherrybaby
. As of late 2006, Red Envelope Entertainment also expanded into producing original content with filmmakers such as John Waters
. Netflix announced plans to close Red Envelope Entertainment in 2008, in part to avoid competition with its studio partners.
Netflix initiated an initial public offering
(IPO) on May 29, 2002, selling 5,500,000 shares of common stock
at the price of US $15.00 per share. On June 14, 2002, the company sold an additional 825,000 shares of common stock at the same price. After incurring substantial losses during its first few years, Netflix posted its first profit during fiscal year 2003, earning US $6.5 million profit on revenues of US $272 million. The company is well known for its worker-oriented culture, including unlimited vacation time for salaried workers and allowing those employees to take any amount of their paychecks in stock options.
Netflix has been one of the most successful dot-com ventures. A The New York Times
article from September 2002, said that, at the time, Netflix mailed about 190,000 discs per day to its 670,000 monthly subscribers. The company's published subscriber count increased from one million in the fourth quarter of 2002 to around 5.6 million at the end of the third quarter of 2006, to 14 million in March 2010. Netflix's growth has been fueled by the fast spread of DVD player
s in households; as of 2004, nearly two-thirds of U.S. homes had a DVD player. Netflix capitalized on the success of the DVD and its rapid expansion into U.S. homes, integrating the potential of the Internet and e-commerce to provide services and catalogs that brick and mortar retailers could not compete with. Netflix also operates an online affiliate program which has helped it to build online sales for DVD rentals.
On September 18, 2011, Netflix announced its intentions to rebrand and structure its DVD home media rental service as an independent subsidiary
company called Qwikster, totally separating DVD rentals and streaming. Andy Rendich, a 12-year veteran of Netflix, would have been the CEO of Qwikster. The new service would carry video games whereas Netflix did not. Then, in October 2011, Netflix announced that it would retain its DVD service under the name Netflix and would not, in fact, create Qwikster for that purpose.
On October 24, 2011, Netflix announced it lost 800,000 US subscribers in the third quarter of 2011 with more subscriber losses expected in the fourth quarter of 2011. Despite the losses, earnings for Netflix jumped 63 percent for the third quarter of 2011.
, Netflix is the biggest source of North American web traffic, accounting for 24.71 percent of aggregated traffic.
Initially, the feature offered subscribers one hour of media for approximately every dollar they spent on their subscription. (A $16.99 plan, for example, entitled the subscriber to 17 hours of streaming media.) In January 2008, however, Netflix lifted this restriction. Virtually all subscribers now are entitled to unlimited hours of streaming media at no additional cost. Subscribers with a plan of $4.99/two DVDs per month, one DVD at a time, are allowed two hours which can only be watched on a computer. The new terms of the service are a response to the introduction of Apple's new video rental services.
According to Netflix Tech Support, Netflix's content library is encoded into three bandwidth tiers, in a compression format based on the VC-1
video and Windows Media audio codecs. Of these, the lowest tier requires a continuous downstream bandwidth (to the client) of 1.5 Mbit/s, and offers stereo audio and video quality comparable to DVD. The middle tier requires 3 Mbit/s, and offers "better than DVD quality". The highest tier requires 5 Mbit/s, and offers 720p HD with surround sound audio. , several devices also have the ability to stream Netflix content at 1080p resolution, including the PlayStation 3
console and Roku 2 series set-top boxes which require 8 Mbit/s.
Netflix does not support playback on Linux PCs although the Linux-based Roku
devices are supported. It is possible to connect the Roku device, game console, or Blu-ray Disc player to a Linux PC (or directly to the computer monitor) with an adapter. It is also possible to run Windows and Netflix in a virtual machine such as Virtualbox
or Qemu
. In a TechRepublic
interview in August 2010, Netflix's VP of Corporate Communications stated that available Silverlight plugins for Linux, such as Moonlight
, do not support the PlayReady
DRM
system that Netflix requires for playback. Netflix does support the Android operating system, which uses the Linux kernel, although is otherwise separate from Linux.
The selection of available titles is based upon the user's IP address. For most users, this corresponds to the user's physical location. However, it means that, for example, a user in Canada who is accessing the internet through a U.S.-based router connection will see the selection available to U.S. users.
According to a survey by Nielsen
on July, 2011, 42% of all Netflix users make use of a stand-alone computer to connect to Netflix, 25% do so by using the Nintendo Wii, 14% by connecting their computers to a TV, 13% make use of a Playstation 3
and 12% use a Xbox 360
.
to bring 2,500+ new movies and television shows to Watch Instantly in what is being called Starz Play.
In August 2010, Netflix announced it had reached a five-year deal worth nearly $1 billion to stream movies from Paramount, Lionsgate and MGM. The deal increases the amount Netflix spends on streaming movies annually. It spent $117 million in the first six months of 2010 on streaming, up from $31 million in 2009. This deal adds roughly $200 million per year.
As of 2011, Netflix's "Watch Instantly" service holds first-run rights to films from Paramount Pictures
, MGM, Lions Gate Entertainment
(through an output deal with Epix), along with films from Sony Pictures, Walt Disney Motion Pictures Group, Overture Films
, Anchor Bay Entertainment
(through an output deal with Starz). In addition, Netflix holds rights to back-catalog titles to films from Time Warner
, Universal Pictures
, Sony Pictures, Paramount Pictures
, MGM, Lions Gate Entertainment
, 20th Century Fox
and other distributors. Netflix also provides current and back-catalog TV programs distributed by NBC Universal
, 20th Century Fox
, Sony Pictures, Disney-ABC Domestic Television, with select shows from Warner Bros.
as well. Netflix also previously showed movies from the Criterion Collection, but the titles were pulled from the streaming library when Criterion Collection titles were added to Hulu
's Hulu Plus streaming library. Netflix has "pay TV
window" deals with Relativity Media
, FilmDistrict
, and Open Road Films
.
On July 12, 2011 Netflix announced that it would separate the current subscription plans into two separate plans: one covering the instant streaming and the other DVD rental. The cost for streaming would be $7.99 while DVD rental would start at the same price. The announcement led to a flurry of negative reception amongst Netflix's Facebook
followers, posting negative comments on the company's wall. Twitter
comments also spiked a "Dear Netflix" trend with generally negative comments as well. The company defended its decision during its initial announcement of the change. "Given the long life we think DVDs by mail will have, treating DVDs as a $2 add-on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs," Netflix wrote on its blog. "Creating an unlimited-DVDs-by-mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs-by-mail offering."
On September 1, 2011, Starz announced it will remove their movies from Netflix streaming on February 28, 2012. Since the agreement was strictly for streaming movie titles, DVD rentals through Netflix will not be affected. However, around that same time, it was announced Netflix would, in 2013, assume the pay-TV rights to films from DreamWorks Animation
(those output rights are currently held by HBO).
In the United States, the company provides a monthly flat-fee service for the rental of DVD and Blu-ray Disc
s. A subscriber creates an ordered list, called a rental queue, of movies to rent. The movies are delivered individually via the United States Postal Service
from an array of regional warehouses. As of March 28, 2011, Netflix had 58 shipping locations throughout the U.S. The subscriber can keep the rented movie as long as desired, but there is a limit on the number of movies (determined by subscription level) that each subscriber can have on loan simultaneously. To rent a new movie, the subscriber must mail the previous one back to Netflix in a prepaid mailing envelope. Upon receipt of the disc, Netflix ships the next available disc in the subscriber's rental queue.
Netflix offers several pricing tiers for DVD rental of one to three DVDs at a time. Gift subscriptions are also available. Since November 21, 2008, Netflix has offered their subscribers access to Blu-ray Disc
s for an additional fee.
In addition to its movie rental service, Netflix formerly sold used movies. The purchase was delivered via the same system and billed using the same payment methods as rentals. This service was discontinued at the end of November 2008.
Starting January 6, 2010, Netflix reached an agreement with Warner Brothers Pictures to delay renting new releases for 28 days from their retail release in an attempt to help studios sell more physical media at retail outlets. A similar deal with Universal Studios and Twentieth Century Fox was reached on April 9, 2010.
In 2011, Netflix split its service pricing so that customers must decide whether they want to pay for online streams, access to DVDs by mail, or both.
said in a Netflix blog post that the DVD section of Netflix would be split off and renamed Qwikster, and stated that the only major change would be separate websites for the services. The new service was to carry video games for an additional charge, whereas Netflix did not. Netflix subscribers who wanted DVDs by mail would have had to use a separate website to access Qwikster.
On October 10, 2011, following negative reaction from customers, Netflix CEO Reed Hastings announced the cancellation of the planned Qwikster service and said that the DVD-by-mail service would remain a part of Netflix.
, with Academy Award winning actor Kevin Spacey
headlining the cast.
Netflix is rumored to have outbid heavyweights HBO and AMC
, two of the current market leaders in original dramatic programming. As Deadline.com reported on March 15, 2011:
Initial industry reactions largely echoed this tone, and, while generally positive, have focused heavily on Netflix's bold, risky, and potentially transformative entry into the original content game. In the face of breathless and rampant media speculation, Netflix's response has thus far been reserved and mostly focused on downplaying the potential implications in its core strategy. In an interview with All Things Digital
's Peter Kafka, Netflix content chief Ted Sarandos attempted to put the situation into perspective:
The day after the after news of the acquisition broke, The Wall Street Journal
responded to Deadline.com
's report that Netflix could pay more than $100 million as part of a deal for 26 episodes, citing a source "[...] familiar with Netflix's plans," who claimed the actual amount will be "[...] much less than that," a sentiment echoed Peter Kafka in his influential Media Memo blog.
Despite initial media confusion to the contrary, Netflix will not be producing House of Cards directly, but rather will license it from Media Rights Capital who will deficit finance the series. Netflix will have first-run domestic exclusivity, but Media Rights Capital will own the series and retain domestic syndication, foreign distribution, worldwide DVD/Blu-ray Disc, and all other ancillary rights.
Netflix spokesmen have declined to specify what the company will actually be paying for the series House of Cards, but as reliable sources have confirmed it to be significantly less than the series' rumored $100 million production cost, Netflix's fee for the 26 episode deal will necessarily amount to less than $3.85 million per episode. For comparison, during the 2006–2010 television seasons, Fox Broadcast Network paid a license fee of $5 million per episode to 20th Century Fox Television for 24, while satellite provider DirecTV pays license fees of only $1–$1.25 million per episode for its critically acclaimed series Damages
and Friday Night Lights
. Netflix's licensing costs for House of Cards will therefore fall somewhere between that of a typical high-end hour-long network drama and a modestly budgeted niche cable production.
In October 2011, it was reported that Netflix was in talks to pick up the critically acclaimed sitcom Arrested Development which originally aired on Fox from 2003-2006, for its planned 4th season. On November 18th, 2011 Netflix confirmed that they will revive the series in 2013.
Another significant cost factor for the series will be Netflix's unique marketing strategy, which, unlike the networks, does not involve spending "anything" to promote the series. According to Netflix spokesman Steve Swasey, "You won't see billboards or TV ads or banner ads." Instead, Netflix will rely entirely on its recommendation technology to suggest House of Cards only to its subscribers who are most likely to enjoy it—viewers who, for example, enjoy political dramas, films by David Fincher, and liked American Beauty and The Usual Suspects. It remains unclear however if or how Netflix plans to leverage House of Cards to drive subscriber growth. But regardless, the frenzy of press attention that emerged even before the acquisition was officially announced demonstrates that, at least for now, public and media interest in the series are high.
Other software options:
. This service was launched on November 19, 2008 to Xbox 360
owners with a Netflix Unlimited subscription and an Xbox Live Gold subscription allowing them to stream movies and TV shows directly from their Netflix Instant Queue from an application on the Dashboard.
In October 2009, Sony Computer Entertainment
and Netflix announced that the service would also be available on the PlayStation 3
from November 2009. The set-up was similar to that on the Xbox 360, allowing Netflix subscribers to stream movies, videogames, and TV shows from their Instant Queue to watch on the console. Unlike on the Xbox 360, the Netflix application was originally available on a Blu-ray Disc (available free to subscribers). On October 19, 2010, a downloadable application was made available through the PlayStation Network. Users do not have to pay for use of the service other than the monthly Netflix subscription.
On January 13, 2010, Nintendo
and Netflix announced that the service would become available on the Wii
. This service was launched in Spring 2010. The service allows the console to stream content in a user's Instant Queue. Initially, a streaming disc specifically for the Wii was required along with an Internet connection to the console. Besides a Netflix account with unlimited streaming, there are no additional costs for the service. In contrast to the other two consoles, the Wii is not capable of HD resolution. The Wii streaming disc was released for testing to customers starting Thursday March 25, 2010. The disc was released to all registered Netflix members on April 12, 2010. On October 18, 2010, the streaming disc on the Wii was no longer necessary as Netflix became a free downloadable application on the Wii Shop Channel. On the PlayStation 3, the streaming disc is also no longer necessary, as members can download the application through the PlayStation Store, and will be a tab under the XMB.
On June 14, 2011, Nintendo's president Satoru Iwata
confirmed that Wii's successor console, the Wii U will also have support for Netflix. Netflix service launched for the Nintendo 3DS
on July 14, 2011.
and provides unlimited access to the Netflix streaming media catalog for all subscribers starting at $7.99/month.
's Blu-ray Disc players. They soon after announced a partnership to instantly stream movies to TiVo DVRs.
In July 2009, Sony announced a partnership with Netflix that will enable Sony BRAVIA Internet Platforms to access instant queues for Netflix users. Any Netflix member with an internet-enabled BRAVIA HDTV will be able to link up their account to their TV and stream videos from their queue.
The 2010 line of Panasonic HDTVs with Viera Cast functionality gained the ability to stream Netflix content directly to the television.
With 2010's release of the Google TV
, a built in application was Netflix streaming.
Smart TVs, such as Samsung Smart TVs or LG Smart TVs, give access to Netflix through a downloadable Netflix app on the TV.
's iPhone
and iPod Touch
mobile devices once the Xbox 360 exclusivity deal expires. In April 2010, the Netflix app debuted on the Apple
's iTunes
app store for use with the iPad
. The iPhone/ iPod Touch version was released on August 26, 2010 via the App Store. Netflix is also available on Windows Phone 7
devices. Nintendo announced that the Nintendo 3DS
portable video game console will support Netflix video streaming in summer 2011. On March 15, 2011, it was announced that Netflix was available for Android phones but not all Android phones can use the application due to DRM issues. Netflix became available on July 14th on the 3DS although no 3D content is available at this time.
survey. This is about five times the number of visitors to blockbuster.com.
On March 30, 2009 Netflix announced an increase in the monthly fee it would charge to customers who rent Blu-ray Discs, from $1 a month to $2 a month.
During the first quarter of 2011, sales and rentals of packaged DVDs and Blu-ray Discs plunged about 20 percent, and the sell-through of packaged discs fell 19.99 percent to $2.07 billion, with more money spent on subscription rentals than in-store rentals.
currently markets itself as a Canadian equivalent to Netflix. On July 19, 2010 Netflix announced that in the fall of 2010 it would launch its instant streaming service in Canada, making Canada the first international market expansion for Netflix. On September 22, 2010, Netflix became available in Canada for $7.99/month, but with a severely limited selection.
On September 23, 2010, company CEO Reed Hastings announced that Netflix aims to expand beyond the U.S. and Canadian market. "For now, we're focused on Canada," Hastings said in an interview. "If we succeed in Canada, we will certainly look at other markets."
Netflix announced on July 5, 2011 that by the end of 2011 it would expand its services into 43 countries and territories in Latin America
and the Caribbean
, offering items in English
, Spanish
and Portuguese
. On September 5, Brazil
became the first country in Latin America
to introduce the service, followed by Argentina
on September 7, Chile
on September 8, Colombia
on September 9 and Mexico
on September 12, with the rest of the continent having the service in the next few weeks.
began an online rental service in October 2002, but left the market in May 2005 and now has a cross-promotional arrangement with Netflix. Netflix has also cited Amazon.com
as a potential competitor, which until 2008 offered online video rentals in the UK and Germany (now sold to LoveFilm
), but has remained coy about any similar intentions for the North American market. Amazon bought Lovefilm in 2011.
Blockbuster Video, the world's largest in-store video rental chain, entered the U.S. online market in August 2004 with a US$19.95 monthly subscription service. This sparked a price war
; Netflix had raised its popular three-disc plan from US$19.95 to US$21.99 just prior to Blockbuster's launch, but by October Netflix reduced this fee to US$17.99. Blockbuster responded with rates as low as US$14.99 for a time, but by August 2005, both companies settled at the (identical) current rates. On July 22, 2007, Netflix announced that it would drop the prices of its two most popular plans by US$1.00 in an effort to better compete with Blockbuster's online-only offerings. Blockbuster's subscriber base after one year was roughly a third of Netflix's size and growing, including promotions such as the option to swap DVDs rented online at neighborhood stores and the simultaneous elimination of late fee
s altogether. Netflix has also been credited with playing a large part in the bankruptcy and shrinkage of several movie rental chains including Blockbuster and Movie Gallery
.
Many in-store video rental chains now have unlimited rental plans similar to those of Netflix. Hollywood Video
started its Movie Value Pass (MVP) service in late 2004, which enables customers to rent up to three movies at a time (due in five days) for US$15 a month. New releases, however, are typically excluded from the service for two to six weeks in the MVP "Basic" plan. Blockbuster started Movie Pass in 2004, which lets customers keep two to three DVDs at a time for US$25–30 a month, without restrictions or due dates. Hollywood's MVP "Premium" plan offers the same benefits for a comparable price. Both services still require the customer to travel to the store to rent and return the movies, and their respective selections are not as diverse as that offered by Netflix.
Redbox
is another competitor that uses a kiosk
approach: rather than mailing DVDs, customers pick up and return DVDs at self-service kiosks located in metropolitan areas. Coinstar
, the owners of Redbox
were rumored to be launching an online streaming service some time in 2011, but no news has come since early 2011. The cost of this service has been speculated at $3.95 per month.
Netflix and Blockbuster largely avoid offering pornography, but several adult-video subscription services were inspired by Netflix, such as SugarDVD
and WantedList
.
At their peak, in July 2011, Netflix shares were trading for $299. Following the customer dissatisfaction and resulting loss of subscribers after the announcements by CEO Reed Hastings that streaming and DVD rental would be charged separately, leading to a higher price for customers who wanted both (on September 1), and that the DVD rental would be split off as the subsidiary Qwikster (on September 18), the share price fell steeply, to around $130. However on October 10th, 2011 the CEO announced that the move to split the company would be scrapped. The reason being that "two websites would make things more difficult", he stated on the Netflix blog. On November 22, Netflix’s share took a tumble, as share prices fell by as much as 7%.
techniques to find that, for example, the rating system people use for older movies is very different from that used for a movie they just saw. The mood of the day made a difference also; for example, Friday ratings were different from Monday morning ratings.
In 2010, Netflix canceled a running contest to improve the company's recommendation algorithm due to privacy concerns: under the terms of the competition, contestants were given access to customer rental data, which the company had purportedly anonymized. However, it was discovered that even this anonymized dataset could, in fact, identify a user personally. Netflix was sued by KamberLaw L.L.C. and ended the contest after reaching a deal with the FTC.
In September 2004, a consumer class action lawsuit, Frank Chavez v. Netflix, Inc., was brought against Netflix in San Francisco Superior Court. The suit alleged false advertising
in relation to claims of "unlimited rentals" with "one-day delivery." In January 2005, Netflix changed its Terms of Use to acknowledge what has commonly become known as "throttling". (Mike Kaltschnee, owner of the Hacking Netflix blog, says Netflix calls this practice "smoothing" internally.)
In October 2005, Netflix proposed a settlement for those who had enrolled as a paid Netflix member prior to January 15, 2005. These earlier members would be able to renew their subscriptions with a one-month free membership, and those early members with current subscriptions would receive a one-month free upgrade to the next-highest membership level. Netflix's settlement denied allegations of any wrongdoing, and the case did not reach a legal judgment. Netflix estimated the settlement cost at approximately US$4 million, which included up to US$2.53 million to cover plaintiff lawyer fees. A controversial aspect of the settlement offer was that the customer's account would continue at the renewed or upgraded membership level after the free month provided by the settlement, with customers being charged accordingly unless they opted out after the month-long free period ended. After Trial Lawyers for Public Justice filed a challenge to the proposed settlement and the Federal Trade Commission
filed an amicus
brief urging the rejection or modification of the settlement, Netflix offered to alter the settlement terms requiring customers to actively approve any continuation after the free month. The final settlement hearing took place on March 22, 2006. Implementation of the settlement was delayed pending appeal the California Appellate Courts. The settlement was affirmed on April 21, 2008, with the court saying, "the trial court did not abuse its discretion in approving the amended class action settlement agreement, approving the notice given to class members, or determining the amount of fees." Interestingly, the court approved email notice and an online claims submission process. The court said:
The settlement was criticized because it paid out $2.5 million to attorneys for fees and costs, while offering only coupons to the class members.
The Terms of Use have since been amended with terms that indicate such a suit would not be possible in the future:
On January 1, 2008, a Netflix employee unofficially stated on the Netflix Community Blog that customers used the RTW page to add newly released movies to the top of their queues, then complained about delays in receiving them after demand outstripped the supply of DVDs on hand. By removing the page, Netflix sought to quell complaints that these movies were not readily available. Critics, however, have suggested this was just another Netflix attempt at throttling.
On April 4, 2006, Netflix filed a patent infringement
lawsuit in which it demanded a jury trial
in the United States District Court for the Northern District of California
, alleging that Blockbuster's online DVD rental
subscription program violated two patents held by Netflix. The first cause of action
alleged Blockbuster's infringement
of U.S. Patent No. 7,024,381 (issued April 4, 2006; only hours before the lawsuit was filed) by copying the "dynamic queue" of DVDs available for each customer, Netflix's method of using the ranked preferences in the queue to send DVDs to subscribers, and Netflix's method permitting the queue to be updated and reordered. The second cause of action alleged infringement of Patent No. 6,584,450 (issued June 24, 2003), which covers in less detail the subscription rental service as well as Netflix's methods of communication and delivery. The dispute was ended a year later, on June 25, 2007, with both companies declining to disclose the terms of their legal settlement, except for a statement by Blockbuster that it would not have a major impact on its future financial performance. Blockbuster also said that the company planned to close 282 stores that year to shift focus to its online service. The company already had closed 290 stores in 2006.
In fall 2006, Blockbuster signed a deal with The Weinstein Company
, that gave it the exclusive rental rights to the studio's films beginning January 1, 2007. This agreement forced Netflix to obtain copies from mass merchants or retailers, instead of directly from the studio. Netflix has speculated that the effect of the Blockbuster-Weinstein agreement could result in higher rental costs and/or fewer copies of the studio's movies, which would limit the number of each movie's DVDs that would be available to subscribers at any one time. , Netflix continues to make available Weinstein movies, including Unknown, School For Scoundrels
and Harsh Times
, among others. The first-sale doctrine
allows Netflix and other video rental businesses to offer movies released by the Weinstein Company, but the long-term effects of the Blockbuster-Weinstein deal remain uncertain.
In March 2010, as part of a redesign of its movie-details pages, the Friends feature began to be phased out. Users could no longer see their friends' ratings on movie pages, and what remained of the friends section was moved to a small link at the bottom of each page. The initial announcement about the redesign on Netflix's official blog made no reference to any changes to the Friends feature. Hundreds of angry users posted negative comments, and the feedback prompted Netflix's Vice President of Product Management
, Todd Yellin, to post a follow-up statement. While apologizing for poor communication about the changes, Yellin stated that the Friends feature would continue to be phased out, citing figures that only 2% of members used the feature and the company's limited resources to maintain the service. Netflix users also began using the movie-reviews section of the website to post comments protesting the changes.
and other open-source operating systems. The company continues to support only Microsoft Windows
and Macintosh
, relying on Microsoft Silverlight
technology. Steve Swasey, Netflix Vice-President of Corporate Communications, told TechRepublic
that despite the willingness of developers to implement Digital Rights Management
measures in the media framework application Moonlight
(which is an open-source implementation of Silverlight), Netflix cannot be "everything for everybody all the time". Netflix does support Android, which is a mobile variant of Linux optimized for cell phones.
, Google released plans for a Chrome/Chrome OS plugin that would allow users with the Chrome OS/browser to use said plugin to view and stream material on Netflix, including Linux users.
On August 9, 2011, Netflix released a Google Chrome web store item for Chrome OS, PC and MAC, but it does not enable Netflix streaming on Linux machines. On Linux Machines running Chrome Browser, the extension sends users to Netflix.com Common issues customers have experienced include the inability to use it while the device is in "developer mode."
On September 1, 2011, Starz announced it had broken off talks with Netflix to renew its streaming deal. This means any Starz movies and shows will be removed from Netflix streaming on February 28, 2012. Movie titles that are available on DVD are not affected.
. Netflix will begin streaming DreamWorks Animation films starting in 2013 and is for an unspecified number of years. The deal will replace the current pact that DreamWorks Animation has with HBO. This marks the first time that a major Hollywood studio has chosen web streaming over pay television.
filed a lawsuit against Netflix for not providing closed captioning
on all of its Watch Instantly movies. The group claims that Netflix is violating the Americans with Disabilities Act by not providing equal access on entertainment.
encoding at a maximum bitrate of between 2600 kbit/s and 3800 kbit/s (depending on the movie). A lower bitrate feed may be supplied if the user's network connection is not capable of handling the maximum bitrate available for the film in question.
Netflix recommends that people stream its movies over a broadband connection with a speed of at least 1.5 megabits per second (1.5 Mbit/s), and that people use an Internet connection of at least 3 megabits per second to get better-looking video on par with a DVD.
Netflix claims that "the large majority of our subscribers are able to receive their movies in about one business day following our shipment of the requested movie from their local distribution center." However, not all shipments come from the subscriber's local distribution center, and shipments from distant centers are often delayed, as well.
and The New York Times
, which allow users to click to add titles to their Netflix queue or begin watching on Watch Instantly from their pages, and Jinni
, which additionally enables search within Watch Instantly and import of some user information like reviews.
The API has allowed many developers to release Netflix applications for mobile devices. On November 16, 2009 Netflix released an official Nokia app that allows some trailer streaming. An official iPhone
app was released on August 26, 2010.
s are stored on Amazon S3
, and each film is encoded into over 50 different versions based on video resolution, audio quality using machines on the cloud
. In total, Netflix has over 1 Petabyte
of data stored on Amazon, and the data is sent to content delivery network
s (including Akamai
, Limelight
, and Level 3
) that feed the content to local ISPs. Netflix uses a number of open-source software
in its backend, including Java, MySQL
, Apache Tomcat
, Hive
, Chukwa, Cassandra, and Hadoop.
Video on demand
Video on Demand or Audio and Video On Demand are systems which allow users to select and watch/listen to video or audio content on demand...
internet streaming media
Streaming media
Streaming media is multimedia that is constantly received by and presented to an end-user while being delivered by a streaming provider.The term "presented" is used in this article in a general sense that includes audio or video playback. The name refers to the delivery method of the medium rather...
in the United States, Canada, and Latin America and flat rate
Flat rate
A flat fee, also referred to as a flat rate or a linear rate, refers to a pricing structure that charges a single fixed fee for a service, regardless of usage. Rarely, it may refer to a rate that does not vary with usage or time of use...
DVD-by-mail in the United States. The company was established in 1997 and is headquartered in Los Gatos, California
Los Gatos, California
The Town of Los Gatos is an incorporated town in Santa Clara County, California, United States. The population was 29,413 at the 2010 census. It is located in the San Francisco Bay Area at the southwest corner of San Jose in the foothills of the Santa Cruz Mountains...
. It started its subscription-based digital distribution
Digital distribution
Online distribution, digital distribution, or electronic software distribution is the practice of delivering content without the use of physical media, typically by downloading via the internet directly to a consumer's device. Online distribution bypasses conventional physical distribution media,...
service in 1999 and by 2009 it was offering a collection of 100,000 titles on DVD and had surpassed 10 million subscribers. On February 25, 2007, Netflix announced the billionth DVD delivery. In April 2011, Netflix announced 23.6 million subscribers.
History
Netflix was founded in 1997 in Scotts Valley, California by Marc Randolph and Reed HastingsReed Hastings
Wilmot Reed Hastings, Jr. is an entrepreneur and education philanthropist. He is the CEO of Netflix, and on the boards of Microsoft, Facebook, and numerous non-profit organizations.- Early life and education :...
, who previously had worked together at Pure Software
Pure Software
Pure Software was founded in October 1991 by Reed Hastings and Mark Box. The original product was a debugging tool for Unix/C engineers called Purify. After adding new products such as Quantify and PureLink, and doubling its revenue every year for four years, Pure Software went public with the...
, along with Mitch Lowe. Hastings was inspired to start the company after being charged late fees for returning a rented copy of Apollo 13
Apollo 13 (film)
Apollo 13 is a 1995 American drama film directed by Ron Howard. The film stars Tom Hanks, Kevin Bacon, Bill Paxton, Gary Sinise, Kathleen Quinlan and Ed Harris. The screenplay by William Broyles, Jr...
after the due date. The Netflix website launched in April 1998 with an online version of a more traditional pay-per-rental model (US $4 per rental plus US $2 in postage; late fees applied). Netflix introduced the monthly subscription concept in September 1999, then dropped the single-rental model in early 2000. Since that time the company has built its reputation on the business model of flat-fee unlimited rentals without due dates, late fees, shipping or handling fees, or per title rental fees.
Netflix developed and maintains an extensive personalized video-recommendation system based on ratings and reviews by its customers. On October 1, 2006, Netflix offered a $1,000,000 prize
Netflix Prize
The Netflix Prize was an open competition for the best collaborative filtering algorithm to predict user ratings for films, based on previous ratings....
to the first developer of a video-recommendation algorithm
Algorithm
In mathematics and computer science, an algorithm is an effective method expressed as a finite list of well-defined instructions for calculating a function. Algorithms are used for calculation, data processing, and automated reasoning...
that could beat its existing algorithm, Cinematch, at predicting customer ratings by more than 10%.
"Some 35,000 different film titles are contained in the 1 million DVDs it sends out every day."
Netflix has played a prominent role in independent film distribution. Through a division called Red Envelope Entertainment
Red Envelope Entertainment
Red Envelope Entertainment was a film production and distribution arm of Netflix, designed to generate content for Netflix's DVD-by-mail service...
, Netflix licensed and distributed independent films such as Born into Brothels
Born into Brothels
Born into Brothels: Calcutta's Red Light Kids is a 2004 American documentary film about the children of prostitutes in Sonagachi, Kolkata's red light district...
and Sherrybaby
Sherrybaby
Sherrybaby is a 2006 American drama film written and directed by Laurie Collyer. Screened at the Sundance Film Festival on January 25, 2006, the film received a limited release in the United States on September 8, 2006.-Plot:...
. As of late 2006, Red Envelope Entertainment also expanded into producing original content with filmmakers such as John Waters
John Waters (filmmaker)
John Samuel Waters, Jr. is an American filmmaker, actor, stand-up comedian, writer, journalist, visual artist, and art collector, who rose to fame in the early 1970s for his transgressive cult films...
. Netflix announced plans to close Red Envelope Entertainment in 2008, in part to avoid competition with its studio partners.
Netflix initiated an initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
(IPO) on May 29, 2002, selling 5,500,000 shares of common stock
Common stock
Common stock is a form of corporate equity ownership, a type of security. It is called "common" to distinguish it from preferred stock. In the event of bankruptcy, common stock investors receive their funds after preferred stock holders, bondholders, creditors, etc...
at the price of US $15.00 per share. On June 14, 2002, the company sold an additional 825,000 shares of common stock at the same price. After incurring substantial losses during its first few years, Netflix posted its first profit during fiscal year 2003, earning US $6.5 million profit on revenues of US $272 million. The company is well known for its worker-oriented culture, including unlimited vacation time for salaried workers and allowing those employees to take any amount of their paychecks in stock options.
Netflix has been one of the most successful dot-com ventures. A The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
article from September 2002, said that, at the time, Netflix mailed about 190,000 discs per day to its 670,000 monthly subscribers. The company's published subscriber count increased from one million in the fourth quarter of 2002 to around 5.6 million at the end of the third quarter of 2006, to 14 million in March 2010. Netflix's growth has been fueled by the fast spread of DVD player
DVD player
A DVD player is a device that plays discs produced under both the DVD-Video and DVD-Audio technical standards, two different and incompatible standards. These devices were invented in 1997 and continue to thrive...
s in households; as of 2004, nearly two-thirds of U.S. homes had a DVD player. Netflix capitalized on the success of the DVD and its rapid expansion into U.S. homes, integrating the potential of the Internet and e-commerce to provide services and catalogs that brick and mortar retailers could not compete with. Netflix also operates an online affiliate program which has helped it to build online sales for DVD rentals.
On September 18, 2011, Netflix announced its intentions to rebrand and structure its DVD home media rental service as an independent subsidiary
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
company called Qwikster, totally separating DVD rentals and streaming. Andy Rendich, a 12-year veteran of Netflix, would have been the CEO of Qwikster. The new service would carry video games whereas Netflix did not. Then, in October 2011, Netflix announced that it would retain its DVD service under the name Netflix and would not, in fact, create Qwikster for that purpose.
On October 24, 2011, Netflix announced it lost 800,000 US subscribers in the third quarter of 2011 with more subscriber losses expected in the fourth quarter of 2011. Despite the losses, earnings for Netflix jumped 63 percent for the third quarter of 2011.
International
In summer 2011, Netflix announced they will expand into the European market, starting in Spain by 2012. In September 2011, Netflix completed the launch of streaming-content services in Latin America by launching in the Caribbean, Mexico, Central and South America. In October 2011, it was announced that Netflix would be launching in the UK and Ireland in early 2012.Services
Netflix is a subscription-based movie and television show rental service that offers media to subscribers via Internet streaming and via US mail.Internet video streaming
Netflix offers Internet video streaming ("Watch Instantly") of selected titles to computers running Windows or Mac OS X and to compatible devices. Internet video streaming once came at no additional charge with Netflix's regular subscription service; however, only a portion of Netflix's content is available via the "Watch Instantly" option. In its simplest form, video is streamed to the user using standard PC hardware, and requires Microsoft's Silverlight software to be installed. Viewing is initiated by pressing a "Play Instantly" button, and played back on the PC monitor. Films can be paused or restarted at will. According to a 2011 report by SandvineSandvine
Sandvine Incorporated , in Waterloo, Ontario, Canada.Sandvine network policy control products are designed to implement broad network policies, ranging from service creation, billing, congestion management, and security...
, Netflix is the biggest source of North American web traffic, accounting for 24.71 percent of aggregated traffic.
Initially, the feature offered subscribers one hour of media for approximately every dollar they spent on their subscription. (A $16.99 plan, for example, entitled the subscriber to 17 hours of streaming media.) In January 2008, however, Netflix lifted this restriction. Virtually all subscribers now are entitled to unlimited hours of streaming media at no additional cost. Subscribers with a plan of $4.99/two DVDs per month, one DVD at a time, are allowed two hours which can only be watched on a computer. The new terms of the service are a response to the introduction of Apple's new video rental services.
According to Netflix Tech Support, Netflix's content library is encoded into three bandwidth tiers, in a compression format based on the VC-1
VC-1
VC-1 is the informal name of the SMPTE 421M video codec standard, which was initially developed as a proprietary video format by Microsoft before it was released as a formal SMPTE standard video format on April 3, 2006...
video and Windows Media audio codecs. Of these, the lowest tier requires a continuous downstream bandwidth (to the client) of 1.5 Mbit/s, and offers stereo audio and video quality comparable to DVD. The middle tier requires 3 Mbit/s, and offers "better than DVD quality". The highest tier requires 5 Mbit/s, and offers 720p HD with surround sound audio. , several devices also have the ability to stream Netflix content at 1080p resolution, including the PlayStation 3
PlayStation 3
The is the third home video game console produced by Sony Computer Entertainment and the successor to the PlayStation 2 as part of the PlayStation series. The PlayStation 3 competes with Microsoft's Xbox 360 and Nintendo's Wii as part of the seventh generation of video game consoles...
console and Roku 2 series set-top boxes which require 8 Mbit/s.
Netflix does not support playback on Linux PCs although the Linux-based Roku
Roku
Roku , is an American, privately held, consumer electronics company that sells home digital media products. The Company is based in Saratoga, California.- Company profile and products :...
devices are supported. It is possible to connect the Roku device, game console, or Blu-ray Disc player to a Linux PC (or directly to the computer monitor) with an adapter. It is also possible to run Windows and Netflix in a virtual machine such as Virtualbox
VirtualBox
Oracle VM VirtualBox is an x86 virtualization software package, originally created by software company Innotek GmbH, purchased by Sun Microsystems, and now developed by Oracle Corporation as part of its family of virtualization products...
or Qemu
QEMU
QEMU is a processor emulator that relies on dynamic binary translation to achieve a reasonable speed while being easy to port on new host CPU architectures....
. In a TechRepublic
TechRepublic
TechRepublic is an online trade publication and social community for IT professionals, with advice on best practices and tools for the day-to-day needs of IT decision-makers....
interview in August 2010, Netflix's VP of Corporate Communications stated that available Silverlight plugins for Linux, such as Moonlight
Moonlight (runtime)
Moonlight is a free and open source implementation of Microsoft's Silverlight for Linux and other Unix based operating systems, developed by the Mono Project...
, do not support the PlayReady
PlayReady
PlayReady is a Digital Rights Management from Microsoft for portable devices. It was announced in February 2007.The main differences relative to previous DRM schemes from Microsoft are:...
DRM
Digital rights management
Digital rights management is a class of access control technologies that are used by hardware manufacturers, publishers, copyright holders and individuals with the intent to limit the use of digital content and devices after sale. DRM is any technology that inhibits uses of digital content that...
system that Netflix requires for playback. Netflix does support the Android operating system, which uses the Linux kernel, although is otherwise separate from Linux.
The selection of available titles is based upon the user's IP address. For most users, this corresponds to the user's physical location. However, it means that, for example, a user in Canada who is accessing the internet through a U.S.-based router connection will see the selection available to U.S. users.
According to a survey by Nielsen
Nielsen
Nielsen , is a Danish patronymic surname, literally meaning son of Niels, Niels being the Danish version of the Greek male given name Νικόλαος, Nikolaos . It is the second most common surname in Denmark, shared by about 5% of the population. It is also used in Norway, although the form Nelsen and...
on July, 2011, 42% of all Netflix users make use of a stand-alone computer to connect to Netflix, 25% do so by using the Nintendo Wii, 14% by connecting their computers to a TV, 13% make use of a Playstation 3
PlayStation 3
The is the third home video game console produced by Sony Computer Entertainment and the successor to the PlayStation 2 as part of the PlayStation series. The PlayStation 3 competes with Microsoft's Xbox 360 and Nintendo's Wii as part of the seventh generation of video game consoles...
and 12% use a Xbox 360
Xbox 360
The Xbox 360 is the second video game console produced by Microsoft and the successor to the Xbox. The Xbox 360 competes with Sony's PlayStation 3 and Nintendo's Wii as part of the seventh generation of video game consoles...
.
History
On October 1, 2008, Netflix announced a partnership with Starz EntertainmentLiberty Starz
Liberty Starz is a wholly owned television programming subsidiary of Liberty Media Corp.The company is headquartered at Meridian, Colorado, though the postal designation of nearby Englewood is commonly listed as the company's location in corporate filings and news accounts...
to bring 2,500+ new movies and television shows to Watch Instantly in what is being called Starz Play.
In August 2010, Netflix announced it had reached a five-year deal worth nearly $1 billion to stream movies from Paramount, Lionsgate and MGM. The deal increases the amount Netflix spends on streaming movies annually. It spent $117 million in the first six months of 2010 on streaming, up from $31 million in 2009. This deal adds roughly $200 million per year.
As of 2011, Netflix's "Watch Instantly" service holds first-run rights to films from Paramount Pictures
Paramount Pictures
Paramount Pictures Corporation is an American film production and distribution company, located at 5555 Melrose Avenue in Hollywood. Founded in 1912 and currently owned by media conglomerate Viacom, it is America's oldest existing film studio; it is also the last major film studio still...
, MGM, Lions Gate Entertainment
Lions Gate Entertainment
Lions Gate Entertainment Corporation is a North American entertainment company. The company was formed in Vancouver, British Columbia in 1997, and is headquartered in Santa Monica, California...
(through an output deal with Epix), along with films from Sony Pictures, Walt Disney Motion Pictures Group, Overture Films
Overture Films
Overture Films, LLC is an American film production and distribution company. It is a subsidiary of Liberty Media ....
, Anchor Bay Entertainment
Anchor Bay Entertainment
Anchor Bay Entertainment is a U.S. based home entertainment and production company and is a division of Starz Media, which is a unit of Starz, LLC. It was previously owned by IDT Entertainment until 2006 when IDT was purchased by Starz Media. Anchor Bay markets and sells feature films, series,...
(through an output deal with Starz). In addition, Netflix holds rights to back-catalog titles to films from Time Warner
Time Warner
Time Warner is one of the world's largest media companies, headquartered in the Time Warner Center in New York City. Formerly two separate companies, Warner Communications, Inc...
, Universal Pictures
Universal Pictures
-1920:* White Youth* The Flaming Disc* Am I Dreaming?* The Dragon's Net* The Adorable Savage* Putting It Over* The Line Runners-1921:* The Fire Eater* A Battle of Wits* Dream Girl* The Millionaire...
, Sony Pictures, Paramount Pictures
Paramount Pictures
Paramount Pictures Corporation is an American film production and distribution company, located at 5555 Melrose Avenue in Hollywood. Founded in 1912 and currently owned by media conglomerate Viacom, it is America's oldest existing film studio; it is also the last major film studio still...
, MGM, Lions Gate Entertainment
Lions Gate Entertainment
Lions Gate Entertainment Corporation is a North American entertainment company. The company was formed in Vancouver, British Columbia in 1997, and is headquartered in Santa Monica, California...
, 20th Century Fox
20th Century Fox
Twentieth Century Fox Film Corporation — also known as 20th Century Fox, or simply 20th or Fox — is one of the six major American film studios...
and other distributors. Netflix also provides current and back-catalog TV programs distributed by NBC Universal
NBC Universal
NBCUniversal Media, LLC is a media and entertainment company engaged in the production and marketing of entertainment, news, and information products and services to a global customer base...
, 20th Century Fox
20th Century Fox
Twentieth Century Fox Film Corporation — also known as 20th Century Fox, or simply 20th or Fox — is one of the six major American film studios...
, Sony Pictures, Disney-ABC Domestic Television, with select shows from Warner Bros.
Warner Bros.
Warner Bros. Entertainment, Inc., also known as Warner Bros. Pictures or simply Warner Bros. , is an American producer of film and television entertainment.One of the major film studios, it is a subsidiary of Time Warner, with its headquarters in Burbank,...
as well. Netflix also previously showed movies from the Criterion Collection, but the titles were pulled from the streaming library when Criterion Collection titles were added to Hulu
Hulu
Hulu is a website and over-the-top subscription service offering ad-supported on-demand streaming video of TV shows, movies, webisodes and other new media, trailers, clips, and behind-the-scenes footage from NBC, Fox, ABC, and Obstacle on October 20th 2011 Nickelodeon and CBS and many other...
's Hulu Plus streaming library. Netflix has "pay TV
Pay TV
Pay television, premium television, or premium channels refers to subscription-based television services, usually provided by both analog and digital cable and satellite, but also increasingly via digital terrestrial and internet television...
window" deals with Relativity Media
Relativity Media
Relativity Media is an American independent motion picture production and investment company based in West Hollywood, California.- Company :...
, FilmDistrict
FilmDistrict
FilmDistrict is an American multi-faceted acquisitions, distribution, production, and financing company focusing on wide release, commercial pictures. Founded in September 2010 by Graham King and Timothy Headington’s GK Films, in partnership with Peter Schlessel...
, and Open Road Films
Open Road Films
Open Road Films is a film distribution company that launched in March, 2011. Backed by the two largest U.S. theatrical exhibitors, AMC Entertainment and Regal Entertainment Group. Open Road Films is aimed to focus on acquiring 8–10 wide-release movies per year. Former executive of Lionsgate and...
.
On July 12, 2011 Netflix announced that it would separate the current subscription plans into two separate plans: one covering the instant streaming and the other DVD rental. The cost for streaming would be $7.99 while DVD rental would start at the same price. The announcement led to a flurry of negative reception amongst Netflix's Facebook
Facebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
followers, posting negative comments on the company's wall. Twitter
Twitter
Twitter is an online social networking and microblogging service that enables its users to send and read text-based posts of up to 140 characters, informally known as "tweets".Twitter was created in March 2006 by Jack Dorsey and launched that July...
comments also spiked a "Dear Netflix" trend with generally negative comments as well. The company defended its decision during its initial announcement of the change. "Given the long life we think DVDs by mail will have, treating DVDs as a $2 add-on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs," Netflix wrote on its blog. "Creating an unlimited-DVDs-by-mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs-by-mail offering."
On September 1, 2011, Starz announced it will remove their movies from Netflix streaming on February 28, 2012. Since the agreement was strictly for streaming movie titles, DVD rentals through Netflix will not be affected. However, around that same time, it was announced Netflix would, in 2013, assume the pay-TV rights to films from DreamWorks Animation
DreamWorks Animation
DreamWorks Animation SKG, Inc. is an American animation studio based in Glendale, California that creates animated feature films, television program and online virtual worlds...
(those output rights are currently held by HBO).
Disc rental
Blu-ray Disc
Blu-ray Disc is an optical disc storage medium designed to supersede the DVD format. The plastic disc is 120 mm in diameter and 1.2 mm thick, the same size as DVDs and CDs. Blu-ray Discs contain 25 GB per layer, with dual layer discs being the norm for feature-length video discs...
s. A subscriber creates an ordered list, called a rental queue, of movies to rent. The movies are delivered individually via the United States Postal Service
United States Postal Service
The United States Postal Service is an independent agency of the United States government responsible for providing postal service in the United States...
from an array of regional warehouses. As of March 28, 2011, Netflix had 58 shipping locations throughout the U.S. The subscriber can keep the rented movie as long as desired, but there is a limit on the number of movies (determined by subscription level) that each subscriber can have on loan simultaneously. To rent a new movie, the subscriber must mail the previous one back to Netflix in a prepaid mailing envelope. Upon receipt of the disc, Netflix ships the next available disc in the subscriber's rental queue.
Netflix offers several pricing tiers for DVD rental of one to three DVDs at a time. Gift subscriptions are also available. Since November 21, 2008, Netflix has offered their subscribers access to Blu-ray Disc
Blu-ray Disc
Blu-ray Disc is an optical disc storage medium designed to supersede the DVD format. The plastic disc is 120 mm in diameter and 1.2 mm thick, the same size as DVDs and CDs. Blu-ray Discs contain 25 GB per layer, with dual layer discs being the norm for feature-length video discs...
s for an additional fee.
In addition to its movie rental service, Netflix formerly sold used movies. The purchase was delivered via the same system and billed using the same payment methods as rentals. This service was discontinued at the end of November 2008.
Starting January 6, 2010, Netflix reached an agreement with Warner Brothers Pictures to delay renting new releases for 28 days from their retail release in an attempt to help studios sell more physical media at retail outlets. A similar deal with Universal Studios and Twentieth Century Fox was reached on April 9, 2010.
In 2011, Netflix split its service pricing so that customers must decide whether they want to pay for online streams, access to DVDs by mail, or both.
Qwikster
On September 18, 2011, Netflix CEO and Co-Founder Reed HastingsReed Hastings
Wilmot Reed Hastings, Jr. is an entrepreneur and education philanthropist. He is the CEO of Netflix, and on the boards of Microsoft, Facebook, and numerous non-profit organizations.- Early life and education :...
said in a Netflix blog post that the DVD section of Netflix would be split off and renamed Qwikster, and stated that the only major change would be separate websites for the services. The new service was to carry video games for an additional charge, whereas Netflix did not. Netflix subscribers who wanted DVDs by mail would have had to use a separate website to access Qwikster.
On October 10, 2011, following negative reaction from customers, Netflix CEO Reed Hastings announced the cancellation of the planned Qwikster service and said that the DVD-by-mail service would remain a part of Netflix.
Original programming
In March 2011, Netflix announced plans to begin acquiring original content for its popular Watch Instantly subscription service, beginning with the hour-long political drama House of Cards, which will debut on the streaming service in late 2012. The series will reportedly be helmed by David FincherDavid Fincher
David Andrew Leo Fincher is an American film and music video director. Known for his dark and stylish thrillers, such as Seven , The Game , Fight Club , Panic Room , and Zodiac , Fincher received Academy Award nominations for Best Director for his 2008 film The Curious Case of Benjamin Button and...
, with Academy Award winning actor Kevin Spacey
Kevin Spacey
Kevin Spacey, CBE is an American actor, director, screenwriter, producer, and crooner. He grew up in California, and began his career as a stage actor during the 1980s, before being cast in supporting roles in film and television...
headlining the cast.
Netflix is rumored to have outbid heavyweights HBO and AMC
AMC
AMC may refer to:* AMC , a short-lived British steam car manufactured in London in 1910*AMC Networks, an American media company** AMC , originally American Movie Classics, a cable television channel owned by AMC Networks...
, two of the current market leaders in original dramatic programming. As Deadline.com reported on March 15, 2011:
- "Netflix landed the drama project by offering a staggering commitment of two seasons, or 26 episodes. Given that the price tag for a high-end drama is in the $4–$6 million an episode range and that a launch of a big original series commands tens of millions of dollars for promotion, the deal, is believed to be worth more than $100 million and could change the way people consume TV shows."
Initial industry reactions largely echoed this tone, and, while generally positive, have focused heavily on Netflix's bold, risky, and potentially transformative entry into the original content game. In the face of breathless and rampant media speculation, Netflix's response has thus far been reserved and mostly focused on downplaying the potential implications in its core strategy. In an interview with All Things Digital
All Things Digital
AllThingsD.com is an online publication that specializes in technology and startup company news, analysis and coverage. It was founded as an extension of the D: All Things Digital conference in 2007 by Kara Swisher and Walt Mossberg....
's Peter Kafka, Netflix content chief Ted Sarandos attempted to put the situation into perspective:
- "It's not much of a radical departure in what we do every day. There’s an added risk factor, in that this is the first time we’re licensing something that hasn't been produced, or at least completed."
- But there's no risk factor in terms of delivery, because we're not investing development money, and we don't pay for it unless they deliver the show. But it is the first time we've made a very large commitment to a series that hasn’t been produced.
- It's just a matter of your philosophy around development. Networks can typically invest tens of millions of dollars in the development of a pilot. And if they put the show on the air and it fails, that's all lost money. There's no monetization of a broken series.
- We're betting on the creative team and the source material. "House of Cards" is incredible source material–the BBC version is quite popular already on Netflix. David Fincher's work has all been incredibly well-received on Netflix, and Kevin Spacey's films have all worked on Netflix. The notion that that team will produce a very good product is a pretty safe bet.
- [...] If the show proves very popular, it won't be any more expensive than licensing a popular show off of a network. So economically, it's not a seismic shift, if it's popular. If it isn't, then we'll have paid more for an unpopular show than we normally would have.
The day after the after news of the acquisition broke, The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
responded to Deadline.com
Deadline.com
Deadline.com, part of Jay Penske's PMC, is an online magazine, founded and edited by Nikki Finke.-Publication:The site is updated several times a day, with the infotainment industry as its focus.-History:...
's report that Netflix could pay more than $100 million as part of a deal for 26 episodes, citing a source "[...] familiar with Netflix's plans," who claimed the actual amount will be "[...] much less than that," a sentiment echoed Peter Kafka in his influential Media Memo blog.
Despite initial media confusion to the contrary, Netflix will not be producing House of Cards directly, but rather will license it from Media Rights Capital who will deficit finance the series. Netflix will have first-run domestic exclusivity, but Media Rights Capital will own the series and retain domestic syndication, foreign distribution, worldwide DVD/Blu-ray Disc, and all other ancillary rights.
Netflix spokesmen have declined to specify what the company will actually be paying for the series House of Cards, but as reliable sources have confirmed it to be significantly less than the series' rumored $100 million production cost, Netflix's fee for the 26 episode deal will necessarily amount to less than $3.85 million per episode. For comparison, during the 2006–2010 television seasons, Fox Broadcast Network paid a license fee of $5 million per episode to 20th Century Fox Television for 24, while satellite provider DirecTV pays license fees of only $1–$1.25 million per episode for its critically acclaimed series Damages
Damages
In law, damages is an award, typically of money, to be paid to a person as compensation for loss or injury; grammatically, it is a singular noun, not plural.- Compensatory damages :...
and Friday Night Lights
Friday Night Lights (TV series)
Friday Night Lights is an American sports drama television series adapted by Peter Berg, Brian Grazer and David Nevins from a book and film of the same name. The series details events surrounding a high school football team based in fictional Dillon, Texas, with particular focus given to team...
. Netflix's licensing costs for House of Cards will therefore fall somewhere between that of a typical high-end hour-long network drama and a modestly budgeted niche cable production.
In October 2011, it was reported that Netflix was in talks to pick up the critically acclaimed sitcom Arrested Development which originally aired on Fox from 2003-2006, for its planned 4th season. On November 18th, 2011 Netflix confirmed that they will revive the series in 2013.
Another significant cost factor for the series will be Netflix's unique marketing strategy, which, unlike the networks, does not involve spending "anything" to promote the series. According to Netflix spokesman Steve Swasey, "You won't see billboards or TV ads or banner ads." Instead, Netflix will rely entirely on its recommendation technology to suggest House of Cards only to its subscribers who are most likely to enjoy it—viewers who, for example, enjoy political dramas, films by David Fincher, and liked American Beauty and The Usual Suspects. It remains unclear however if or how Netflix plans to leverage House of Cards to drive subscriber growth. But regardless, the frenzy of press attention that emerged even before the acquisition was officially announced demonstrates that, at least for now, public and media interest in the series are high.
Profiles
In June 2008, Netflix announced plans to eliminate its online subscriber profile feature that fall. Profiles allow one subscriber account to contain multiple users (e.g. husband and wife, or two roommates) with separate DVD queues, ratings, recommendations, friend lists, reviews, and intra-site communications for each. Netflix contended that elimination of profiles would improve customer experience. However, likely as a result of negative reviews and reaction by Netflix users. Netflix reversed its decision to remove profiles 11 days after its announcement. In announcing the reinstatement of profiles, Netflix defended its original decision, "Because of an ongoing desire to make our website easier to use, we believed taking a feature away that is only used by a very small minority would help us improve the site for everyone." Then explained its reversal, "Listening to our members, we realized that users of this feature often describe it as an essential part of their Netflix experience. Simplicity is only one virtue and it can certainly be outweighed by utility."Hardware supported
List of Netflix-ready devices:- Apple TV set-top box
- Boxee BoxBoxee BoxBoxee Box by D-Link is a Linux-based set-top device and media extender that first began shipping in 33 countries worldwide on the 10th of November 2010...
set-top box - Insignia Blu-ray Disc players and home theater systems
- LG ElectronicsLG ElectronicsLG Electronics is a global electronics and telecommunications company headquartered in Yeouido, Seoul, South Korea. The company operates its business through five divisions: mobile communications, home entertainment, home appliance, air conditioning and business solution...
Blu-ray Disc players, TVs (LH50 series LCD and PS80 plasma), and home theater systems - Logitech Revue Google TV Buddy Box
- MicrosoftMicrosoftMicrosoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...
Xbox 360Xbox 360The Xbox 360 is the second video game console produced by Microsoft and the successor to the Xbox. The Xbox 360 competes with Sony's PlayStation 3 and Nintendo's Wii as part of the seventh generation of video game consoles...
, (Xbox LiveXbox LiveXbox Live is an online multiplayer gaming and digital media delivery service created and operated by Microsoft Corporation. It is currently the only online gaming service on consoles that charges users a fee to play multiplayer gaming. It was first made available to the Xbox system in 2002...
Gold Subscription Required) - NintendoNintendois a multinational corporation located in Kyoto, Japan. Founded on September 23, 1889 by Fusajiro Yamauchi, it produced handmade hanafuda cards. By 1963, the company had tried several small niche businesses, such as a cab company and a love hotel....
WiiWiiThe Wii is a home video game console released by Nintendo on November 19, 2006. As a seventh-generation console, the Wii primarily competes with Microsoft's Xbox 360 and Sony's PlayStation 3. Nintendo states that its console targets a broader demographic than that of the two others...
and Nintendo 3DSNintendo 3DSThe is a portable game console produced by Nintendo. The autostereoscopic device is able to project stereoscopic 3D effects without the use of 3D glasses or any additional accessories. The Nintendo 3DS features backward compatibility with Nintendo DS series software, including Nintendo DSi software...
(Wii U support also confirmed) - PanasonicPanasonicPanasonic is an international brand name for Japanese electric products manufacturer Panasonic Corporation, which was formerly known as Matsushita Electric Industrial Co., Ltd...
Some Blu-ray Disc players, televisions and home theater systems - PhilipsPhilipsKoninklijke Philips Electronics N.V. , more commonly known as Philips, is a multinational Dutch electronics company....
Some Blu-ray Disc players and TVs - Popbox set-top box (announced)
- RokuRokuRoku , is an American, privately held, consumer electronics company that sells home digital media products. The Company is based in Saratoga, California.- Company profile and products :...
set-top box - SamsungSamsungThe Samsung Group is a South Korean multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea...
Some Blu-ray Disc players and home theater systems - SeagateSeagate TechnologySeagate Technology is one of the world's largest manufacturers of hard disk drives. Incorporated in 1978 as Shugart Technology, Seagate is currently incorporated in Dublin, Ireland and has its principal executive offices in Scotts Valley, California, United States.-1970s:On November 1, 1979...
FreeAgent Theater+ HD Media Players - SharpSharp Corporationis a Japanese multinational corporation that designs and manufactures electronic products. Headquartered in Abeno-ku, Osaka, Japan, Sharp employs more than 55,580 people worldwide as of June 2011. The company was founded in September 1912 and takes its name from one of its founder's first...
Some Blu-ray Disc players - SonySony, commonly referred to as Sony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan and the world's fifth largest media conglomerate measured by revenues....
Blu-ray Disc players, TVs, Google TVGoogle TVGoogle TV is a Smart TV platform from Google. It was announced on May 20, 2010, at Google’s Google I/O event and was co-developed by Google, Intel, Sony and Logitech...
devices, and PlayStation 3PlayStation 3The is the third home video game console produced by Sony Computer Entertainment and the successor to the PlayStation 2 as part of the PlayStation series. The PlayStation 3 competes with Microsoft's Xbox 360 and Nintendo's Wii as part of the seventh generation of video game consoles... - TiVoTiVoTiVo is a digital video recorder developed and marketed by TiVo, Inc. and introduced in 1999. TiVo provides an on-screen guide of scheduled broadcast programming television programs, whose features include "Season Pass" schedules which record every new episode of a series, and "WishList"...
DVRs (HD, HD XL, Series3™, Premiere and Premiere XL boxes) - ViewsonicViewSonicViewSonic Corporation is a manufacturer and provider of visual technology, specifically CRT monitors, liquid crystal displays, projectors, plasma displays, HDTV technology, and mobile products, including Mini and All-in-One PCs and wireless monitors....
VMP75 - VizioVizioVizio is a privately held producer of consumer electronics, based in Irvine, California, USA. It was founded in October 2002 as V Inc. Vizio's major partner in the consumer electronics arena is AmTran Technology, a Taiwan-based OEM/ODM that manufactures more than half of the televisions sold...
Some Blu-ray Disc players and TVs - Western DigitalWestern DigitalWestern Digital Corporation is one of the largest computer hard disk drive manufacturers in the world. It has a long history in the electronics industry as an integrated circuit maker and a storage products company. Western Digital was founded on April 23, 1970 by Alvin B...
WD Live plus Media Player
Software support
Supported Web Browsers by Platform:- Microsoft WindowsMicrosoft WindowsMicrosoft Windows is a series of operating systems produced by Microsoft.Microsoft introduced an operating environment named Windows on November 20, 1985 as an add-on to MS-DOS in response to the growing interest in graphical user interfaces . Microsoft Windows came to dominate the world's personal...
: Windows XPWindows XPWindows XP is an operating system produced by Microsoft for use on personal computers, including home and business desktops, laptops and media centers. First released to computer manufacturers on August 24, 2001, it is the second most popular version of Windows, based on installed user base...
Service Pack 2, Windows VistaWindows VistaWindows Vista is an operating system released in several variations developed by Microsoft for use on personal computers, including home and business desktops, laptops, tablet PCs, and media center PCs...
, Windows 7 running Internet ExplorerInternet ExplorerWindows Internet Explorer is a series of graphical web browsers developed by Microsoft and included as part of the Microsoft Windows line of operating systems, starting in 1995. It was first released as part of the add-on package Plus! for Windows 95 that year...
6 (or higher), Firefox 2 (or higher) or Google ChromeGoogle ChromeGoogle Chrome is a web browser developed by Google that uses the WebKit layout engine. It was first released as a beta version for Microsoft Windows on September 2, 2008, and the public stable release was on December 11, 2008. The name is derived from the graphical user interface frame, or...
6 (or higher). New viewer requires use of the Microsoft Silverlight technology and a 1.2 GHz CPU. - Mac OS XMac OS XMac OS X is a series of Unix-based operating systems and graphical user interfaces developed, marketed, and sold by Apple Inc. Since 2002, has been included with all new Macintosh computer systems...
: An Intel-based Mac with OS 10.4.8 or later. Browser support is Safari 3 (or higher), Firefox 2 (or higher) or Google ChromeGoogle ChromeGoogle Chrome is a web browser developed by Google that uses the WebKit layout engine. It was first released as a beta version for Microsoft Windows on September 2, 2008, and the public stable release was on December 11, 2008. The name is derived from the graphical user interface frame, or...
. Mac Netflix was added October 27, 2008, which requires use of the Microsoft Silverlight technology.
Other software options:
- Android including the HTC Incredible (2.2), Nexus One (2.2/3), EVO 4G (2.2) and G2 (2.2), Samsung Nexus S (2.3), Motorola Droid (2.2), LG Revolution (2.2), Casio G'zOne Commando C771 (2.2), and Archos 32 Internet Tablet (2.2). May be limited due to DRM issues Now with device check removed it will work on various devices
- BoxeeBOXEEBoxee is a cross-platform freeware HTPC software application with a 10-foot user interface and social networking features designed for the living-room TV...
OS X and Windows versions only (beta) - iOS iPadIPadThe iPad is a line of tablet computers designed, developed and marketed by Apple Inc., primarily as a platform for audio-visual media including books, periodicals, movies, music, games, and web content. The iPad was introduced on January 27, 2010 by Apple's then-CEO Steve Jobs. Its size and...
, iPhoneIPhoneThe iPhone is a line of Internet and multimedia-enabled smartphones marketed by Apple Inc. The first iPhone was unveiled by Steve Jobs, then CEO of Apple, on January 9, 2007, and released on June 29, 2007...
, iPod TouchIPod TouchThe iPod Touch is a portable media player, personal digital assistant, handheld game console, and Wi-Fi mobile device designed and marketed by Apple Inc. The iPod Touch adds the multi-touch graphical user interface to the iPod line...
, Apple TV - MediaPortalMediaPortalMediaPortal is an open-source media center software project, often considered an alternative to Windows Media Center. It provides a 10-foot user interface for performing typical PVR/TiVo functionality, including playing, pausing, and recording live TV; playing DVDs, videos, and music; viewing...
Windows using the My Netflix plug-in. - PlayOn Windows, from MediaMallMediaMall TechnologiesMediaMall Technologies, Inc. is an American software company based in New York, Seattle and Copenhagen. MediaMall develops software that enables networked entertainment devices, such as networked HDTV's, networked set-top-boxes and DMA's, and networked game consoles, to view Internet-based content...
, used with UPnP clients such as PlayStation 3PlayStation 3The is the third home video game console produced by Sony Computer Entertainment and the successor to the PlayStation 2 as part of the PlayStation series. The PlayStation 3 competes with Microsoft's Xbox 360 and Nintendo's Wii as part of the seventh generation of video game consoles...
, WiiWiiThe Wii is a home video game console released by Nintendo on November 19, 2006. As a seventh-generation console, the Wii primarily competes with Microsoft's Xbox 360 and Sony's PlayStation 3. Nintendo states that its console targets a broader demographic than that of the two others...
and XBMC Media Center - PlexPlexappPlex is a partially open-source freeware media player for Intel-based Apple Macintosh computers. It has a 10-foot user interface design for the living-room TV...
media center for Mac OS X and Microsoft Windows, using the Netflix plug-in from their App Store. - Windows Media CenterWindows Media CenterWindows Media Center is a digital video recorder and media player developed by Microsoft. It is an application that allows users to view and record live television, as well as organize and play music and videos...
Windows XP Media Center EditionWindows XP Media Center EditionWindows XP Media Center Edition is a version of the Windows XP operating system designed to serve as a home-entertainment hub. The last version, Windows XP Media Center Edition 2005, was released in October 2004.-Versions:...
, Windows VistaWindows VistaWindows Vista is an operating system released in several variations developed by Microsoft for use on personal computers, including home and business desktops, laptops, tablet PCs, and media center PCs...
(Home Premium, Ultimate), Windows 7 (Home Premium, Professional, Enterprise, Ultimate). - Windows Phone 7Windows Phone 7Windows Phone is a mobile operating system developed by Microsoft, and is the successor to its Windows Mobile platform, although incompatible with it. Unlike its predecessor, it is primarily aimed at the consumer market rather than the enterprise market...
Video game consoles
At E3 2008, Microsoft announced a deal to distribute Netflix videos over Xbox LiveXbox Live
Xbox Live is an online multiplayer gaming and digital media delivery service created and operated by Microsoft Corporation. It is currently the only online gaming service on consoles that charges users a fee to play multiplayer gaming. It was first made available to the Xbox system in 2002...
. This service was launched on November 19, 2008 to Xbox 360
Xbox 360
The Xbox 360 is the second video game console produced by Microsoft and the successor to the Xbox. The Xbox 360 competes with Sony's PlayStation 3 and Nintendo's Wii as part of the seventh generation of video game consoles...
owners with a Netflix Unlimited subscription and an Xbox Live Gold subscription allowing them to stream movies and TV shows directly from their Netflix Instant Queue from an application on the Dashboard.
In October 2009, Sony Computer Entertainment
Sony Computer Entertainment
Sony Computer Entertainment, Inc. is a major video game company specializing in a variety of areas in the video game industry, and is a wholly owned subsidiary and part of the Consumer Products & Services Group of Sony...
and Netflix announced that the service would also be available on the PlayStation 3
PlayStation 3
The is the third home video game console produced by Sony Computer Entertainment and the successor to the PlayStation 2 as part of the PlayStation series. The PlayStation 3 competes with Microsoft's Xbox 360 and Nintendo's Wii as part of the seventh generation of video game consoles...
from November 2009. The set-up was similar to that on the Xbox 360, allowing Netflix subscribers to stream movies, videogames, and TV shows from their Instant Queue to watch on the console. Unlike on the Xbox 360, the Netflix application was originally available on a Blu-ray Disc (available free to subscribers). On October 19, 2010, a downloadable application was made available through the PlayStation Network. Users do not have to pay for use of the service other than the monthly Netflix subscription.
On January 13, 2010, Nintendo
Nintendo
is a multinational corporation located in Kyoto, Japan. Founded on September 23, 1889 by Fusajiro Yamauchi, it produced handmade hanafuda cards. By 1963, the company had tried several small niche businesses, such as a cab company and a love hotel....
and Netflix announced that the service would become available on the Wii
Wii
The Wii is a home video game console released by Nintendo on November 19, 2006. As a seventh-generation console, the Wii primarily competes with Microsoft's Xbox 360 and Sony's PlayStation 3. Nintendo states that its console targets a broader demographic than that of the two others...
. This service was launched in Spring 2010. The service allows the console to stream content in a user's Instant Queue. Initially, a streaming disc specifically for the Wii was required along with an Internet connection to the console. Besides a Netflix account with unlimited streaming, there are no additional costs for the service. In contrast to the other two consoles, the Wii is not capable of HD resolution. The Wii streaming disc was released for testing to customers starting Thursday March 25, 2010. The disc was released to all registered Netflix members on April 12, 2010. On October 18, 2010, the streaming disc on the Wii was no longer necessary as Netflix became a free downloadable application on the Wii Shop Channel. On the PlayStation 3, the streaming disc is also no longer necessary, as members can download the application through the PlayStation Store, and will be a tab under the XMB.
On June 14, 2011, Nintendo's president Satoru Iwata
Satoru Iwata
is the fourth president of Nintendo, succeeding the long-standing previous president of the company, Hiroshi Yamauchi in 2002. He was responsible in great part for defining Nintendo's strategy both before and during the release of its Nintendo GameCube video game console in 2001, a vision which...
confirmed that Wii's successor console, the Wii U will also have support for Netflix. Netflix service launched for the Nintendo 3DS
Nintendo 3DS
The is a portable game console produced by Nintendo. The autostereoscopic device is able to project stereoscopic 3D effects without the use of 3D glasses or any additional accessories. The Nintendo 3DS features backward compatibility with Nintendo DS series software, including Nintendo DSi software...
on July 14, 2011.
Set-top boxes
In May 2008 the first set-top-box to stream Netflix's Watch Instantly movies directly to televisions was released. The device is manufactured by RokuRoku
Roku , is an American, privately held, consumer electronics company that sells home digital media products. The Company is based in Saratoga, California.- Company profile and products :...
and provides unlimited access to the Netflix streaming media catalog for all subscribers starting at $7.99/month.
Blu-ray Disc players
In October 2008 Netflix agreed to instantly stream movies to two of SamsungSamsung
The Samsung Group is a South Korean multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea...
's Blu-ray Disc players. They soon after announced a partnership to instantly stream movies to TiVo DVRs.
Televisions
In January 2009 Netflix announced a similar partnership with Vizio and LG to instantly stream movies directly to their high definition televisions.In July 2009, Sony announced a partnership with Netflix that will enable Sony BRAVIA Internet Platforms to access instant queues for Netflix users. Any Netflix member with an internet-enabled BRAVIA HDTV will be able to link up their account to their TV and stream videos from their queue.
The 2010 line of Panasonic HDTVs with Viera Cast functionality gained the ability to stream Netflix content directly to the television.
With 2010's release of the Google TV
Google TV
Google TV is a Smart TV platform from Google. It was announced on May 20, 2010, at Google’s Google I/O event and was co-developed by Google, Intel, Sony and Logitech...
, a built in application was Netflix streaming.
Smart TVs, such as Samsung Smart TVs or LG Smart TVs, give access to Netflix through a downloadable Netflix app on the TV.
Handheld devices
In September 2009, Netflix CEO Reed Hastings expressed his desire to expand his company's video-streaming service to AppleApple Computer
Apple Inc. is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad...
's iPhone
IPhone
The iPhone is a line of Internet and multimedia-enabled smartphones marketed by Apple Inc. The first iPhone was unveiled by Steve Jobs, then CEO of Apple, on January 9, 2007, and released on June 29, 2007...
and iPod Touch
IPod Touch
The iPod Touch is a portable media player, personal digital assistant, handheld game console, and Wi-Fi mobile device designed and marketed by Apple Inc. The iPod Touch adds the multi-touch graphical user interface to the iPod line...
mobile devices once the Xbox 360 exclusivity deal expires. In April 2010, the Netflix app debuted on the Apple
Apple Computer
Apple Inc. is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad...
's iTunes
ITunes
iTunes is a media player computer program, used for playing, downloading, and organizing digital music and video files on desktop computers. It can also manage contents on iPod, iPhone, iPod Touch and iPad....
app store for use with the iPad
IPad
The iPad is a line of tablet computers designed, developed and marketed by Apple Inc., primarily as a platform for audio-visual media including books, periodicals, movies, music, games, and web content. The iPad was introduced on January 27, 2010 by Apple's then-CEO Steve Jobs. Its size and...
. The iPhone/ iPod Touch version was released on August 26, 2010 via the App Store. Netflix is also available on Windows Phone 7
Windows Phone 7
Windows Phone is a mobile operating system developed by Microsoft, and is the successor to its Windows Mobile platform, although incompatible with it. Unlike its predecessor, it is primarily aimed at the consumer market rather than the enterprise market...
devices. Nintendo announced that the Nintendo 3DS
Nintendo 3DS
The is a portable game console produced by Nintendo. The autostereoscopic device is able to project stereoscopic 3D effects without the use of 3D glasses or any additional accessories. The Nintendo 3DS features backward compatibility with Nintendo DS series software, including Nintendo DSi software...
portable video game console will support Netflix video streaming in summer 2011. On March 15, 2011, it was announced that Netflix was available for Android phones but not all Android phones can use the application due to DRM issues. Netflix became available on July 14th on the 3DS although no 3D content is available at this time.
Sales and marketing
The domain netflix.com attracted at least 194 million visitors annually by 2008, according to a Compete.comCompete.com
Compete.com is a web traffic analysis service of Compete, Inc. which operates in the United States and publishes the approximate number of global visitors to the top 1,000,000 web sites in the world...
survey. This is about five times the number of visitors to blockbuster.com.
On March 30, 2009 Netflix announced an increase in the monthly fee it would charge to customers who rent Blu-ray Discs, from $1 a month to $2 a month.
During the first quarter of 2011, sales and rentals of packaged DVDs and Blu-ray Discs plunged about 20 percent, and the sell-through of packaged discs fell 19.99 percent to $2.07 billion, with more money spent on subscription rentals than in-store rentals.
Expansion
Netflix had preliminary plans to expand to the UK in 2004, but the expansion was cancelled as Netflix concentrated its services on the U.S. market. Zip.caZip.ca
Zip.ca is an online DVD rental company operating in Canada. It has a database of over 82,000 unique titles.Zip.ca is a member of the privately held group of companies, and was owner of the Ottawa Rapidz baseball team until its first-season bankruptcy....
currently markets itself as a Canadian equivalent to Netflix. On July 19, 2010 Netflix announced that in the fall of 2010 it would launch its instant streaming service in Canada, making Canada the first international market expansion for Netflix. On September 22, 2010, Netflix became available in Canada for $7.99/month, but with a severely limited selection.
On September 23, 2010, company CEO Reed Hastings announced that Netflix aims to expand beyond the U.S. and Canadian market. "For now, we're focused on Canada," Hastings said in an interview. "If we succeed in Canada, we will certainly look at other markets."
Netflix announced on July 5, 2011 that by the end of 2011 it would expand its services into 43 countries and territories in Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
and the Caribbean
Caribbean
The Caribbean is a crescent-shaped group of islands more than 2,000 miles long separating the Gulf of Mexico and the Caribbean Sea, to the west and south, from the Atlantic Ocean, to the east and north...
, offering items in English
English language
English is a West Germanic language that arose in the Anglo-Saxon kingdoms of England and spread into what was to become south-east Scotland under the influence of the Anglian medieval kingdom of Northumbria...
, Spanish
Spanish language
Spanish , also known as Castilian , is a Romance language in the Ibero-Romance group that evolved from several languages and dialects in central-northern Iberia around the 9th century and gradually spread with the expansion of the Kingdom of Castile into central and southern Iberia during the...
and Portuguese
Portuguese language
Portuguese is a Romance language that arose in the medieval Kingdom of Galicia, nowadays Galicia and Northern Portugal. The southern part of the Kingdom of Galicia became independent as the County of Portugal in 1095...
. On September 5, Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
became the first country in Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
to introduce the service, followed by Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
on September 7, Chile
Chile
Chile ,officially the Republic of Chile , is a country in South America occupying a long, narrow coastal strip between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far...
on September 8, Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
on September 9 and Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
on September 12, with the rest of the continent having the service in the next few weeks.
Competitors
Netflix's success has inspired a number of other DVD rental companies both in the United States and abroad, but none of the purely online companies appear to approach Netflix in terms of market share or revenues. Wal-MartWal-Mart
Wal-Mart Stores, Inc. , branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000...
began an online rental service in October 2002, but left the market in May 2005 and now has a cross-promotional arrangement with Netflix. Netflix has also cited Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
as a potential competitor, which until 2008 offered online video rentals in the UK and Germany (now sold to LoveFilm
LoveFilm
LoveFilm is a UK-based provider of home video and video game rental through DVD-by-mail and streaming video on demand in the UK, Germany and Scandinavia...
), but has remained coy about any similar intentions for the North American market. Amazon bought Lovefilm in 2011.
Blockbuster Video, the world's largest in-store video rental chain, entered the U.S. online market in August 2004 with a US$19.95 monthly subscription service. This sparked a price war
Price war
Price war is a term used in economic sector to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reduction. One competitor will lower its price, then others will lower their prices to match. If one of them reduces their price again, a new round of...
; Netflix had raised its popular three-disc plan from US$19.95 to US$21.99 just prior to Blockbuster's launch, but by October Netflix reduced this fee to US$17.99. Blockbuster responded with rates as low as US$14.99 for a time, but by August 2005, both companies settled at the (identical) current rates. On July 22, 2007, Netflix announced that it would drop the prices of its two most popular plans by US$1.00 in an effort to better compete with Blockbuster's online-only offerings. Blockbuster's subscriber base after one year was roughly a third of Netflix's size and growing, including promotions such as the option to swap DVDs rented online at neighborhood stores and the simultaneous elimination of late fee
Late fee
A late fee, also known as a late fine or a past due fee, is a charge levied against a client by a company or organization for not paying a bill or returning a rented or borrowed item by its due date. Its use is most commonly associated with businesses like creditors, video rental outlets and...
s altogether. Netflix has also been credited with playing a large part in the bankruptcy and shrinkage of several movie rental chains including Blockbuster and Movie Gallery
Movie Gallery
Movie Gallery, Inc. was the second largest movie and game rental company in the United States, behind Blockbuster Video. The company rented and sold Blu-ray Discs, DVDs, VHS tapes, and video games...
.
Many in-store video rental chains now have unlimited rental plans similar to those of Netflix. Hollywood Video
Hollywood Video
Hollywood Entertainment Corporation , known as Hollywood Video, was a VHS, DVD, and video game rental shop company started in 1988...
started its Movie Value Pass (MVP) service in late 2004, which enables customers to rent up to three movies at a time (due in five days) for US$15 a month. New releases, however, are typically excluded from the service for two to six weeks in the MVP "Basic" plan. Blockbuster started Movie Pass in 2004, which lets customers keep two to three DVDs at a time for US$25–30 a month, without restrictions or due dates. Hollywood's MVP "Premium" plan offers the same benefits for a comparable price. Both services still require the customer to travel to the store to rent and return the movies, and their respective selections are not as diverse as that offered by Netflix.
Redbox
Redbox
Redbox is an American company that specializes in the rental of DVDs, Blu-ray Discs, and video games via automated retail kiosks. As of the end of June 2011, Redbox had over 33,000 kiosks in over 27,800 locations....
is another competitor that uses a kiosk
Kiosk
Kiosk is a small, separated garden pavilion open on some or all sides. Kiosks were common in Persia, India, Pakistan, and in the Ottoman Empire from the 13th century onward...
approach: rather than mailing DVDs, customers pick up and return DVDs at self-service kiosks located in metropolitan areas. Coinstar
Coinstar
Coinstar, Inc. is an American company.The firm's original focus was the conversion of loose change into paper currency, donations or gift cards via coin counter kiosks...
, the owners of Redbox
Redbox
Redbox is an American company that specializes in the rental of DVDs, Blu-ray Discs, and video games via automated retail kiosks. As of the end of June 2011, Redbox had over 33,000 kiosks in over 27,800 locations....
were rumored to be launching an online streaming service some time in 2011, but no news has come since early 2011. The cost of this service has been speculated at $3.95 per month.
Netflix and Blockbuster largely avoid offering pornography, but several adult-video subscription services were inspired by Netflix, such as SugarDVD
SugarDVD
SugarDVD is the largest renter of adult DVDs online. Initially, SugarDVD's services were limited to flat-rate membership-based DVD-by-mail, but since its creation in 2002, the company has developed websites in several different areas of the adult industry. SugarDVD maintains its position in the...
and WantedList
WantedList
WantedList was established in 1999 as an adult DVD-by-mail service, offering flat-rate subscription-based rentals by mail to customers in the United States. It is based in Van Nuys, Los Angeles, California with an additional distribution center in New Jersey....
.
Time Warner
In a 2010 New York Times interview, Time Warner CEO Jeffrey Bewkes downplayed Netflix as a threat to more traditional media companies. "It’s a little bit like, is the Albanian army going to take over the world?" Bewkes told the newspaper. "I don’t think so." At the same time, he recognized that the company's DVD service may have contributed to a decline in DVD sales, and regarding the industry's willingness to make special deals with Netflix in the future, he added "This has been an era of experimentation, and I think it’s coming to a close." Bewkes later refined his position, stating during a 2011 conference call that "Things like Netflix are welcome additions to the infrastructure. They can monetize value for companies like Warner that maybe there wasn’t — in terms of efficiency for older product, wasn’t as available before[...]Our view of Netflix has been very consistent. I’ve tried at times to be humorous about it, sometimes to make a point."2010
In 2010, Netflix's stock price increased 219% to $175.70 and it added 8 million subscribers, bringing its total to 20 million. Revenue jumped 29% to $2.16 billion and net income was up 39% to $161 million.2011
In April 2011, Netflix is expected to earn $1.07 a share in the first quarter of 2011 on revenue of $705.7 million, a huge increase compared to the year-earlier profit of 59 cents on revenue of $493.7 million, according to a survey of 25 analysts polled by FactSet Research.At their peak, in July 2011, Netflix shares were trading for $299. Following the customer dissatisfaction and resulting loss of subscribers after the announcements by CEO Reed Hastings that streaming and DVD rental would be charged separately, leading to a higher price for customers who wanted both (on September 1), and that the DVD rental would be split off as the subsidiary Qwikster (on September 18), the share price fell steeply, to around $130. However on October 10th, 2011 the CEO announced that the move to split the company would be scrapped. The reason being that "two websites would make things more difficult", he stated on the Netflix blog. On November 22, Netflix’s share took a tumble, as share prices fell by as much as 7%.
Recommendation Algorithm
In 2006, Netflix held the first Netflix Prize competition to find a better program to predict user preferences and beat its existing Netflix movie recommendation system, known as Cinematch, by at least 10%. An AT&T Research Team called BellKor, combined with commendo's team BigChaos and others, won the 2009 grand prize competition for $1 million. The winning team algorithm, called Pragmatic Chaos, used machine learningMachine learning
Machine learning, a branch of artificial intelligence, is a scientific discipline concerned with the design and development of algorithms that allow computers to evolve behaviors based on empirical data, such as from sensor data or databases...
techniques to find that, for example, the rating system people use for older movies is very different from that used for a movie they just saw. The mood of the day made a difference also; for example, Friday ratings were different from Monday morning ratings.
In 2010, Netflix canceled a running contest to improve the company's recommendation algorithm due to privacy concerns: under the terms of the competition, contestants were given access to customer rental data, which the company had purportedly anonymized. However, it was discovered that even this anonymized dataset could, in fact, identify a user personally. Netflix was sued by KamberLaw L.L.C. and ended the contest after reaching a deal with the FTC.
Throttling
Chavez v. Netflix Inc.In September 2004, a consumer class action lawsuit, Frank Chavez v. Netflix, Inc., was brought against Netflix in San Francisco Superior Court. The suit alleged false advertising
False advertising
False advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or...
in relation to claims of "unlimited rentals" with "one-day delivery." In January 2005, Netflix changed its Terms of Use to acknowledge what has commonly become known as "throttling". (Mike Kaltschnee, owner of the Hacking Netflix blog, says Netflix calls this practice "smoothing" internally.)
In October 2005, Netflix proposed a settlement for those who had enrolled as a paid Netflix member prior to January 15, 2005. These earlier members would be able to renew their subscriptions with a one-month free membership, and those early members with current subscriptions would receive a one-month free upgrade to the next-highest membership level. Netflix's settlement denied allegations of any wrongdoing, and the case did not reach a legal judgment. Netflix estimated the settlement cost at approximately US$4 million, which included up to US$2.53 million to cover plaintiff lawyer fees. A controversial aspect of the settlement offer was that the customer's account would continue at the renewed or upgraded membership level after the free month provided by the settlement, with customers being charged accordingly unless they opted out after the month-long free period ended. After Trial Lawyers for Public Justice filed a challenge to the proposed settlement and the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
filed an amicus
Amicus curiae
An amicus curiae is someone, not a party to a case, who volunteers to offer information to assist a court in deciding a matter before it...
brief urging the rejection or modification of the settlement, Netflix offered to alter the settlement terms requiring customers to actively approve any continuation after the free month. The final settlement hearing took place on March 22, 2006. Implementation of the settlement was delayed pending appeal the California Appellate Courts. The settlement was affirmed on April 21, 2008, with the court saying, "the trial court did not abuse its discretion in approving the amended class action settlement agreement, approving the notice given to class members, or determining the amount of fees." Interestingly, the court approved email notice and an online claims submission process. The court said:
The summary notice and long-form notice together provided all of the detail required by statute or court rule, in a highly accessible form. The fact that not all of the information was contained in a single e-mail or mailing is immaterial… Using a summary notice that directed the class member wanting more information to a Web site containing a more detailed notice, and provided hyperlinks to that Web site, was a perfectly acceptable manner of giving notice in this case… The class members conducted business with defendant over the Internet, and can be assumed to know how to navigate between the summary notice and the Web site. Using the capability of the Internet in that fashion was a sensible and efficient way of providing notice, especially compared to the alternative Vogel apparently preferred—mailing out a lengthy legalistic document that few class members would have been able to plow through.
The settlement was criticized because it paid out $2.5 million to attorneys for fees and costs, while offering only coupons to the class members.
The Terms of Use have since been amended with terms that indicate such a suit would not be possible in the future:
These Terms of Use shall be governed by and construed in accordance with the laws of the state of Delaware, without regard to conflicts of laws provisions. You and Netflix agree that the United States District Court for the Northern District of California and/or the California Superior Court for the County of Santa Clara shall have exclusive jurisdiction over any dispute between you and Netflix relating in any way to the Netflix service or Web site or these Terms of Use. You and Netflix expressly and irrevocably consent to personal jurisdiction and venue in these courts. The parties agree that in any such dispute or subsequent legal action, they will only assert claims in an individual (non-class, non-representative) basis, and that they will not seek or agree to serve as a named representative in a class action or seek relief on behalf of those other than themselves.
Releasing This Week
The Netflix website at one time featured a list of titles "Releasing This Week" (RTW) that enabled customers to easily view new DVDs the company planned for rental release each week. On December 21, 2007, the company removed the link to the page without notice and replaced it with a slider system showing only four previously released movies at a time. The new page, called "Popular New Releases", does not list newly released DVDs for rental. The listing of new releases is still active, though no menu option links to the page.On January 1, 2008, a Netflix employee unofficially stated on the Netflix Community Blog that customers used the RTW page to add newly released movies to the top of their queues, then complained about delays in receiving them after demand outstripped the supply of DVDs on hand. By removing the page, Netflix sought to quell complaints that these movies were not readily available. Critics, however, have suggested this was just another Netflix attempt at throttling.
Dynamic queue, subscription & delivery methods
Netflix v. BlockbusterOn April 4, 2006, Netflix filed a patent infringement
Patent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...
lawsuit in which it demanded a jury trial
Jury trial
A jury trial is a legal proceeding in which a jury either makes a decision or makes findings of fact which are then applied by a judge...
in the United States District Court for the Northern District of California
United States District Court for the Northern District of California
The United States District Court for the Northern District of California is the federal United States district court whose jurisdiction comprises following counties of California: Alameda, Contra Costa, Del Norte, Humboldt, Lake, Marin, Mendocino, Monterey, Napa, San Benito, San Francisco, San...
, alleging that Blockbuster's online DVD rental
Online DVD rental
DVD-by-mail services allow a person to rent DVDs, Blu-ray Discs, video games and VCDs, among other film media online; for delivery by mail. Generally, all interaction between the renter and the rental company takes place through the company's website....
subscription program violated two patents held by Netflix. The first cause of action
Cause of action
In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...
alleged Blockbuster's infringement
Patent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...
of U.S. Patent No. 7,024,381 (issued April 4, 2006; only hours before the lawsuit was filed) by copying the "dynamic queue" of DVDs available for each customer, Netflix's method of using the ranked preferences in the queue to send DVDs to subscribers, and Netflix's method permitting the queue to be updated and reordered. The second cause of action alleged infringement of Patent No. 6,584,450 (issued June 24, 2003), which covers in less detail the subscription rental service as well as Netflix's methods of communication and delivery. The dispute was ended a year later, on June 25, 2007, with both companies declining to disclose the terms of their legal settlement, except for a statement by Blockbuster that it would not have a major impact on its future financial performance. Blockbuster also said that the company planned to close 282 stores that year to shift focus to its online service. The company already had closed 290 stores in 2006.
In fall 2006, Blockbuster signed a deal with The Weinstein Company
The Weinstein Company
The Weinstein Company is an American film studio founded by Bob and Harvey Weinstein in 2005 after the brothers left the then-Disney-owned Miramax Films, which they had co-founded in 1979...
, that gave it the exclusive rental rights to the studio's films beginning January 1, 2007. This agreement forced Netflix to obtain copies from mass merchants or retailers, instead of directly from the studio. Netflix has speculated that the effect of the Blockbuster-Weinstein agreement could result in higher rental costs and/or fewer copies of the studio's movies, which would limit the number of each movie's DVDs that would be available to subscribers at any one time. , Netflix continues to make available Weinstein movies, including Unknown, School For Scoundrels
School for Scoundrels (2006 film)
School for Scoundrels is a 2006 American comedy film, starring Billy Bob Thornton and Jon Heder, and directed by Todd Phillips. The film is based on the 1960 British film of the same name...
and Harsh Times
Harsh Times
Harsh Times is a 2006 American crime film set in South Los Angeles. The film stars Christian Bale and Freddy Rodriguez, and was written and directed by David Ayer, who wrote the script for the Academy Award-winning film Training Day. The film was distributed by Metro-Goldwyn-Mayer Pictures and...
, among others. The first-sale doctrine
First-sale doctrine
The first-sale doctrine is a limitation on copyright that was recognized by the Supreme Court of the United States in 1908 and subsequently codified in the Copyright Act of 1976,...
allows Netflix and other video rental businesses to offer movies released by the Weinstein Company, but the long-term effects of the Blockbuster-Weinstein deal remain uncertain.
Removal of Friends feature
Since 2004, Netflix subscribers could utilize a feature that allowed them to interact with friends who were also members. This feature was meant to tap into the growing popularity of social networking. With this feature, users could see how their friends rated a movie on that movie's page; view what DVDs their friends were renting; and allow them to leave their friends notes with film recommendations.In March 2010, as part of a redesign of its movie-details pages, the Friends feature began to be phased out. Users could no longer see their friends' ratings on movie pages, and what remained of the friends section was moved to a small link at the bottom of each page. The initial announcement about the redesign on Netflix's official blog made no reference to any changes to the Friends feature. Hundreds of angry users posted negative comments, and the feedback prompted Netflix's Vice President of Product Management
Product management
Product management is an organizational lifecycle function within a company dealing with the planning, forecasting, or marketing of a product or products at all stages of the product lifecycle....
, Todd Yellin, to post a follow-up statement. While apologizing for poor communication about the changes, Yellin stated that the Friends feature would continue to be phased out, citing figures that only 2% of members used the feature and the company's limited resources to maintain the service. Netflix users also began using the movie-reviews section of the website to post comments protesting the changes.
Linux support
Netflix has consistently shown reluctance to support customers using LinuxLinux
Linux is a Unix-like computer operating system assembled under the model of free and open source software development and distribution. The defining component of any Linux system is the Linux kernel, an operating system kernel first released October 5, 1991 by Linus Torvalds...
and other open-source operating systems. The company continues to support only Microsoft Windows
Microsoft Windows
Microsoft Windows is a series of operating systems produced by Microsoft.Microsoft introduced an operating environment named Windows on November 20, 1985 as an add-on to MS-DOS in response to the growing interest in graphical user interfaces . Microsoft Windows came to dominate the world's personal...
and Macintosh
Macintosh
The Macintosh , or Mac, is a series of several lines of personal computers designed, developed, and marketed by Apple Inc. The first Macintosh was introduced by Apple's then-chairman Steve Jobs on January 24, 1984; it was the first commercially successful personal computer to feature a mouse and a...
, relying on Microsoft Silverlight
Microsoft Silverlight
Microsoft Silverlight is an application framework for writing and running rich Internet applications, with features and purposes similar to those of Adobe Flash. The run-time environment for Silverlight is available as a plug-in for web browsers running under Microsoft Windows and Mac OS X...
technology. Steve Swasey, Netflix Vice-President of Corporate Communications, told TechRepublic
TechRepublic
TechRepublic is an online trade publication and social community for IT professionals, with advice on best practices and tools for the day-to-day needs of IT decision-makers....
that despite the willingness of developers to implement Digital Rights Management
Digital rights management
Digital rights management is a class of access control technologies that are used by hardware manufacturers, publishers, copyright holders and individuals with the intent to limit the use of digital content and devices after sale. DRM is any technology that inhibits uses of digital content that...
measures in the media framework application Moonlight
Moonlight (runtime)
Moonlight is a free and open source implementation of Microsoft's Silverlight for Linux and other Unix based operating systems, developed by the Mono Project...
(which is an open-source implementation of Silverlight), Netflix cannot be "everything for everybody all the time". Netflix does support Android, which is a mobile variant of Linux optimized for cell phones.
, Google released plans for a Chrome/Chrome OS plugin that would allow users with the Chrome OS/browser to use said plugin to view and stream material on Netflix, including Linux users.
On August 9, 2011, Netflix released a Google Chrome web store item for Chrome OS, PC and MAC, but it does not enable Netflix streaming on Linux machines. On Linux Machines running Chrome Browser, the extension sends users to Netflix.com Common issues customers have experienced include the inability to use it while the device is in "developer mode."
Starz
In April 2011, the pay cable channel Starz announced it was to impose new restrictions on what it allows Netflix to stream to customers’ computers and television sets. Most notably, the company announced a three-month delay between the time Starz airs new TV episodes and when those episodes will be available on Netflix.On September 1, 2011, Starz announced it had broken off talks with Netflix to renew its streaming deal. This means any Starz movies and shows will be removed from Netflix streaming on February 28, 2012. Movie titles that are available on DVD are not affected.
DreamWorks Animation
In September 2011, Netflix announced that it had secured a streaming deal with DreamWorks AnimationDreamWorks Animation
DreamWorks Animation SKG, Inc. is an American animation studio based in Glendale, California that creates animated feature films, television program and online virtual worlds...
. Netflix will begin streaming DreamWorks Animation films starting in 2013 and is for an unspecified number of years. The deal will replace the current pact that DreamWorks Animation has with HBO. This marks the first time that a major Hollywood studio has chosen web streaming over pay television.
The CW
In October 2011, The CW Television Network signed a four-year deal with Netflix that will allow its customers to instantly watch more than 700 hours of previous seasons of scripted series that currently air on The CW.Closed captioning
In June 2011, the National Association of the DeafNational Association of the Deaf (United States)
The National Association of the Deaf was founded in Cincinnati, Ohio in 1880 as a non-profit organization run by deaf people to advocate for deaf rights. The first president of the organization was Robert P. McGregor of Ohio. It includes associations from all 50 states and Washington, DC...
filed a lawsuit against Netflix for not providing closed captioning
Closed captioning
Closed captioning is the process of displaying text on a television, video screen or other visual display to provide additional or interpretive information to individuals who wish to access it...
on all of its Watch Instantly movies. The group claims that Netflix is violating the Americans with Disabilities Act by not providing equal access on entertainment.
Streaming
Netflix streams HD content using Microsoft VC1APVC-1
VC-1 is the informal name of the SMPTE 421M video codec standard, which was initially developed as a proprietary video format by Microsoft before it was released as a formal SMPTE standard video format on April 3, 2006...
encoding at a maximum bitrate of between 2600 kbit/s and 3800 kbit/s (depending on the movie). A lower bitrate feed may be supplied if the user's network connection is not capable of handling the maximum bitrate available for the film in question.
Netflix recommends that people stream its movies over a broadband connection with a speed of at least 1.5 megabits per second (1.5 Mbit/s), and that people use an Internet connection of at least 3 megabits per second to get better-looking video on par with a DVD.
"Throttling"
Netflix's allocation policy – referred to by many as "throttling" – gives priority shipping and selection to customers who rent fewer discs per month. Higher volume renters may see some of their selections delayed, routed elsewhere, or sent out of order.Netflix claims that "the large majority of our subscribers are able to receive their movies in about one business day following our shipment of the requested movie from their local distribution center." However, not all shipments come from the subscriber's local distribution center, and shipments from distant centers are often delayed, as well.
Netflix API
On October 1, 2008, Netflix launched an Application Programming Interface (API). The Netflix API allows access to data for all Netflix titles as well as access on a user's behalf to manage their movie queue. The Developer Network includes a forum for asking and answering questions. The Netflix API is free and allows commercial use. A variety of services have been created around the Netflix API or have integrated the API. Examples include Rotten TomatoesRotten Tomatoes
Rotten Tomatoes is a website devoted to reviews, information, and news of films—widely known as a film review aggregator. Its name derives from the cliché of audiences throwing tomatoes and other vegetables at a poor stage performance...
and The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
, which allow users to click to add titles to their Netflix queue or begin watching on Watch Instantly from their pages, and Jinni
Jinni (search engine)
Jinni is a search engine and recommendation engine for movies, TV shows and short films. The service is powered by the Movie Genome, an approach to indexing titles based on attributes like mood, tone, plot, and structure.-Description:...
, which additionally enables search within Watch Instantly and import of some user information like reviews.
The API has allowed many developers to release Netflix applications for mobile devices. On November 16, 2009 Netflix released an official Nokia app that allows some trailer streaming. An official iPhone
IPhone
The iPhone is a line of Internet and multimedia-enabled smartphones marketed by Apple Inc. The first iPhone was unveiled by Steve Jobs, then CEO of Apple, on January 9, 2007, and released on June 29, 2007...
app was released on August 26, 2010.
IT infrastructure
In 2010, Netflix migrated its infrastructure to Amazon EC2. Master Copies of digital films from movie studioMovie studio
A movie studio is a term used to describe a major entertainment company or production company that has its own privately owned studio facility or facilities that are used to film movies...
s are stored on Amazon S3
Amazon S3
Amazon S3 is an online storage web service offered by Amazon Web Services. Amazon S3 provides storage through web services interfaces...
, and each film is encoded into over 50 different versions based on video resolution, audio quality using machines on the cloud
Cloud computing
Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility over a network ....
. In total, Netflix has over 1 Petabyte
Petabyte
A petabyte is a unit of information equal to one quadrillion bytes, or 1000 terabytes. The unit symbol for the petabyte is PB...
of data stored on Amazon, and the data is sent to content delivery network
Content Delivery Network
A content delivery network or content distribution network is a system of computers containing copies of data placed at various nodes of a network....
s (including Akamai
Akamai Technologies
Akamai Technologies, Inc. is an Internet content delivery network headquartered in Cambridge, Massachusetts, US.The company was founded in 1998 by then-MIT graduate student Daniel M. Lewin, and MIT Applied Mathematics professor Tom Leighton...
, Limelight
Limelight Networks
Limelight Networks is a content delivery network service provider. The company is based in Tempe, Arizona, U.S.A., with offices in San Francisco, Seattle, New York, London, Paris, Frankfurt, and Tokyo. The company operates a global fiber-optic network that helps content publishers avoid sending...
, and Level 3
Level 3 Communications
Level 3 Communications is a telecommunications and Internet service provider headquartered in Broomfield, Colorado.It operates a Tier 1 network. The company provides core transport, IP, voice, video and content delivery for most of the medium to large Internet carriers in North America and Europe...
) that feed the content to local ISPs. Netflix uses a number of open-source software
Open-source software
Open-source software is computer software that is available in source code form: the source code and certain other rights normally reserved for copyright holders are provided under a software license that permits users to study, change, improve and at times also to distribute the software.Open...
in its backend, including Java, MySQL
MySQL
MySQL officially, but also commonly "My Sequel") is a relational database management system that runs as a server providing multi-user access to a number of databases. It is named after developer Michael Widenius' daughter, My...
, Apache Tomcat
Apache Tomcat
Apache Tomcat is an open source web server and servlet container developed by the Apache Software Foundation...
, Hive
Apache Hive
Apache Hive is a data warehouse infrastructure built on top of Hadoop for providing data summarization, query, and analysis. While initially developed by Facebook, Apache Hive is now used and developed by other companies such as Netflix...
, Chukwa, Cassandra, and Hadoop.
See also
- GameFlyGameFlyGameFly is an American online video game rental subscription service that specializes in providing games for game consoles and handheld game consoles....
, a similar online video game rental service modeled after Netflix. - Simply AudiobooksSimply audiobooksSimply Audiobooks is a privately-held e-commerce company that offers audio books for rent, download and sale. Their primary product line is a subscription-based rent-by-mail model for books on CD, similar to Netflix's DVD-by-mail model. Although a Canadian company, the majority of Simply...
, a similar online rental service for audiobooks. - LoveFilmLoveFilmLoveFilm is a UK-based provider of home video and video game rental through DVD-by-mail and streaming video on demand in the UK, Germany and Scandinavia...
, an online video rental service in Northern Europe - EvdeizleEvdeizleEvdeizle is an online DVD rental company which is similar to Netflix of USA. Evdeizle is the first and the biggest online DVD rental company in Turkey. The company has been founded in Ankara, the capital of Turkey, in year 2004. Following its establishment, Evdeizle.com had been rewarded as the...
, an online video rental service in Turkey
External links
- Netflix
- Netflix Online Community
- Settlement of Frank Chavez v. Netflix, Inc. Class Action
- An Analysis of Netflix's DVD Allocation System
- Netflix sends frequent renters to the back of DVD line
- The Brain Behind Netflix: Lesley Stahl Profiles Company Founder Reed Hastings
- For Some Netflix Users, Red Envelopes Gather Dust
- "Behind How Netflix gets your movies to your mailbox so fast" The Chicago Tribune accessed January 3, 2010.
- "Behind the scenes at Netflix"—a photo essay by The Boston GlobeThe Boston GlobeThe Boston Globe is an American daily newspaper based in Boston, Massachusetts. The Boston Globe has been owned by The New York Times Company since 1993...
about Netflix' Northborough, MassachusettsNorthborough, MassachusettsNorthborough is a town in Worcester County, Massachusetts, United States. The official spelling of the town's name is "Northborough", but the shorter spelling "Northboro" is also used...
hub, August 23, 2007.