How do you make ‘Blockbuster’ for the streamer that helped kill it? ‘Call out Netflix’
Hey there, and welcome to episode 11 of the Streamer Insights video series! Today, I thought I’d look at the rise and fall of Netflix, and I wanted to know how Netflix got to the place where blockbusters and studio blockbusters were as interchangeable as toilet paper.
Let’s kick things off with some notes on how Netflix rose to prominence, the changes that made it hard to get a Netflix subscription, and how it was able to survive despite the very different business models of Blockbuster and Netflix.
Netflix’s rise
Let’s start with a little history. The movie rental industry was dying when Netflix debuted. In fact, Blockbuster had just lost $7 billion in a disastrous IPO.
It had just made $2.5 billion in the first year. By the end of 2018, it had spent $4.6 billion.
You can see why this was a risky purchase for Blockbuster, and it had very little, if anything, to offer. It was a dead business.
However, the two big tech guys who made Netflix money were Jawed Karan and Joe Lewis. Karan was the head of video game development at Ubisoft when he saw that Netflix was going to make a game. It wasn’t really the ideal business model, but Karan thought it would work, so he said, “Let’s do it.”
Karan and Lewis started to work with the team at Netflix, and the idea was to create a subscription video service. Karan and Lewis saw how much potential this had, and also how much potential was there within their company for making money.
When they first talked to Netflix, they said, “We’d spend $100 million developing this thing, let’s do it.” And Netflix said, “No. We’ll invest in the technology, that’s how we’ll make money.”
When Karan and Lewis realized that they could make money on their business, they doubled their investment. And now, instead of a $100 million project, Netflix had a billion dollar business. Their goal was to make all your video streaming and rental experience as simple and elegant as possible
