Netflix is a juggernaut and the most likely candidate to join the Big 4 (Amazon, Facebook, Google, Apple) as a true global dominator with stratospheric valuations – its niche: entertainment. When consumers think streaming, they think Netflix – not Hulu, not HBO, and as of yet, not Amazon (holding breath here). Original content like House of Cards, Orange is the new Black, and The Crown has helped the company keep a firm lead as the world's best Internet TV provider. The lethal paid wall subscription model comes equipped with the perfect combination of solid MRR, low attrition, and loyalty from customers.
How loyal? Millennials spend more time watching Netflix than they do all of cable TV combined. Netflix now has nearly 118 million streaming subscribers globally, adding 8.3 million subscribers last quarter alone. About 55 million of those are U.S. subscribers, but international growth rates are up 11% with subscriber numbers surpassing domestic for the first time in the company's existence. Churn rates are low and the stock price has done nothing but climb since the early 2000's when it IPO'd at $15 USD.
If we press rewind, back in 2000, Netflix was a relatively small upstart, with 300,000 subscribers opting for movies by mail and slow delivery times. Profit numbers were absent, and operational issues gave rise to concern from analysts covering the company. So, Netflix founder Reed Hastings flew to Dallas to propose a partnership with Blockbuster for $50 million, whereby Blockbuster would acquire the DVD subscription mail order company and represent their brand in stores. Blockbuster balked at the offering, and sent Hastings and his team back to California with a bag of insecurity around future positioning. Today, Hastings’ failed attempt at a deal is nothing but a strike of good fortune, as the streaming service carrying a market cap of $140 Billion has grown into the entertainment operating system of our lives.
In an article published by INC.com in 2005, Hastings' vision for the future was to reach 20+ million subscribers, and become a company like HBO - one that transforms the entertainment industry. Producers and directors would be able to find the right audience, and Netflix would be the gateway for changing the experience of helping people find movies they love. Mission accomplished! And, while Amazon now owns RETAIL (sorry Walmart), Netflix has become the cornerstone of the ENTERTAINMENT industry as loved ones get together to “Netflix and chill”.