Arts, Featured Story, Television

Netflix: From The Mailroom To The Laptop

Netflix has grown into a dominant force in television. Here’s a peek at where Netflix has been, where it is, and where it’s going.

Who would think that Netflix would be born out of a $40 Apollo 13 late fee? Who knew Blockbuster’s decision to turn down an offer to buy the media mailing service is what would be the traditional rental service’s ultimate downfall?

The gargantuan streaming service, founded in 1997 by Marc Randolph and Reed Hastings, took six years to turn a profit. Built off of a $2.5 million startup investment, the DVD delivery service, with its tacky yet adorable puppet commercials and flat-rate, monthly $6 service charge, would blossom into a $100 million cultural staple in just over a decade.

Netflix revolutionized long-standing media rental service in the late ‘90s and early 2000s. Blockbuster (and, less so, Hollywood Video) held a huge monopoly over DVD and VCR rentals, but their rental policy, which worked off what most deemed excessive late fees, was pesky to say the least. The Internet accessibility of the day was incomparable to today’s technology, making the process of driving into town to rent a DVD less an imposition. In 2003 things began to flip. Netflix started making a profit, expanded its collection to over 35,000 different titles, and continually shipped out over one million DVDs a day.

In February 2007, Netflix started offering its now-hallmark streaming service, though then it was on a comparably miniscule scale. As interest in the online service rose, its grizzled competitors began to slide. After the stock-market crash in 2008, Blockbuster quickly began to lose its footing as the king of rental services, with Netflix heating up as a competitor. Just two years later, Blockbuster admitted to huge losses in revenue and filed for bankruptcy in September of 2010.

Later that year, Netflix started offering its streaming service separate from the DVD delivery packages. Netflix had transitioned from being one of the leading contributors to U.S. Postal Service’s business to being one of the most heavily trafficked websites on the Internet.

Furthering this distancing between its DVD delivery and online streaming services, Netflix announced in September 2011 that it would be splitting its two services into two separate companies. Netflix would continue streaming online and would create Qwikster to accommodate for its DVD services. With this announcement and the proposed raised rates, Netflix lost 800,000 subscribers. It’s the only dumb business move the company has ever made. Netflix quickly reversed their decision to separate the two services, leaving users with an $8 subscription option that gave them both DVD and streaming services. And the rest … is history.

Arrested Development producer Brian Grazer announced on April 7 that the show will receive another 17 episode order on Netflix. The streaming service continues its pattern of reviving old television shows. Before the arrival of Netflix, cancelled cult comedy series like Arrested Development and network shows that never made it past the development stage like Tina Fey’s Unbreakable Kimmy Schmidt would never see the light the day. More recently, however, Netflix has been bringing the likes of The Killing, Trailer Park Boys, Star Wars: The Clone Wars, and other previously cancelled series to new life.

Following in the footsteps of more established services—cable and HBO—Netflix and other online streaming providers, such as Hulu and Amazon, have been launching original series programming over the last several years. Since the first Netflix original series Lilyhammer aired in 2012, the service has been churning out original content—ranging from television and documentary series to comedy specials. Flagship series such as House of Cards and Orange is the New Black  have proved that online-only web television series have the potential for both commercial and critical success, earning Netflix nine and 12 Emmy nominations respectively. Kevin Spacey has also earned a Golden Globe award for Best Television Actor for his portrayal of Frank Underwood in House of Cards.

The success of Netflix’s original series began with the political drama, House of Cards, and branched out into documentary and comedy. Ranging from stand-up comedy to mockumentary-style series, Netflix has produced specials for the likes of Aziz Ansari, Craig Ferguson, Russell Peters, and Nick Offerman. The service has also acquired Chelsea Handler’s next project and five Marvel series. Since the inception of original programming, the service has seen an increase from 33 million to 57.4 subscribers while boasting revenue of $5.5 billion.

Five years ago, Netflix served primarily as a DVD rental service that also happened to offer a library of “Watch Instant” television series and films made available for streaming on the side. In 2015, the on-demand service has the potential to edge out premium cable competitors like HBO through the development of original content streamlined exclusively for streaming. In recent years, Netflix has produced content worthy of critical recognition—The Square was nominated for an Academy Award for Best Documentary Feature at the 86th Academy Awards, marking the first nomination for a Netflix Original production. As more people turn away from cable programming and to online streaming services, Netflix now offers viewers the convenience of web streaming without forfeiting the high quality typically attributed to premium cable programming.

For a long time, Netflix made their name on accessibility. Now, they’re fully embracing the content side.

Daredevil arrives tomorrow. Netflix subscribers will get a 13-episode taste of Matt Murdock, New York City lawyer by day and Hell’s Kitchen crime fighter by night.

It’s the latest move in what has become a rapid arms race in media content. Netflix, a service that was once just a platform for marathons of Breaking Bad or How I Met Your Mother, is now a principal content creator of network and cable castoffs, political dramas, now comic book adaptations, and eventually four Adam Sandler movies.

But Netflix isn’t the only company stockpiling assets and making moves. HBO has come out with HBONow, its own streaming service independent of a cable subscription. Yahoo! produced and released the latest season of Community (formerly of NBC). Hulu remains a viable option. Jeffrey Tambor of Amazon’s Transparent won a Golden Globe for his performance in the web show.

To be a viable entertainment option now and through the near future, and that includes everyone from ABC to YouTube, you have to create and distribute content. And whoever does that with the most efficiency and creativity will win our hearts.

So let’s take a look at what Netflix is doing to avoid the fate of its godfather Blockbuster. The streaming service will continue to produce shows like House of Cards, already slated for a fourth season. And they’ll continue to release the shows like Kimmy Schmidt that fell through the network cracks. Netflix’s partnership with Marvel, however, gives them a breadth of possible characters to work with. Netflix has ABC’s Agents of Shield, but will soon host and stream their own Marvel properties. Its next big move is first Daredevil, then his comic book street fighting pals Jessica Jones, Luke Cage, and Iron Fist, who are all set to have their own shows. The four will eventually pair up for a joint season called The Defenders.

Does that sound familiar? It should. It’s the move Marvel made with The Avengers before. They’ve just traded scopes—the movie theater for your laptop and the wide world for the new York underworld. So far, it has paid off for Marvel Studios, who release two to three highly profitable films a year.

It’ll be harder to measure success with Netflix. Subscribers will pay for Daredevil whether they watch it or not. And if folks have to choose between the prestige quality of HBONow and Netflix, it’s be hard to begrudge anyone for going with HBO. But in the current state of media, the only way to survive is to offer accessible content that no one else has—to tell stories that no one else has. For a long time, Netflix made their name on accessibility. Now, they’re fully embracing the content side. In a world where companies can fall as quick as you can say “Hollywood Video”, the only way to survive is to forge ahead.

This story was a collaboration between Arts Editors Ryan Dowd, Chris Fuller, and Summer Lin.

Featured Image by Breck Wills / Heights Graphic

April 9, 2015