However, the release of a particular series turned the tide, elevating the company’s worth to an impressive $366 billion today.
This is the story of how Netflix nearly lost its footing and the remarkable recovery that followed…
Netflix was originally launched as a mail-order DVD rental service by Marc Randolph and Reed Hastings in 1998.
During the dot com boom, it provided an online catalog of films for its subscribers to explore.
Within a year, the co-founders adopted a subscription model, allowing users to rent, receive, and return unlimited DVDs each month by mail.
By January 2002, the service had reached 500,000 subscribers, growing to 700,000 by year’s end.
By 2005, the subscriber base expanded more than fivefold to 3.6 million, indicating a strong demand for DVD rentals.
Netflix’s hallmark feature, streaming, didn’t become available until 2007, a notion difficult to fathom today. (Surprisingly, it didn’t reach the UK until 2012.)
The year 2007 marked a transition from traditional DVD rentals.
Then, in 2011, Netflix made a critical decision that nearly jeopardized its future.
The company separated its DVD and streaming subscriptions and increased their prices.
What was once a $10 combined package turned into two separate $8 plans, effectively a 60 percent price increase, amidst a major recession.
The company also rebranded itself as Qwikster – not the most appealing name.
This change infuriated customers, resulting in serious repercussions for the business.
Qwikster lost 800,000 subscribers in a single quarter, and its stock plummeted almost 80 percent, dropping from $300 to $65 per share by the end of the year.
Executives quickly reversed the name change and issued a public apology. However, the damage was done, leading to a challenging year and a half.
In an effort to recover, Netflix focused closely on consumer demands.
One of those demands was for more original content, which Netflix delivered on…
The groundwork for original Netflix series began in 2010, and by 2013, the company was ready to reap the rewards.
Its first original series, the political thriller House of Cards, premiered in April, receiving critical praise and numerous awards.
The winning formula included an intense narrative and Hollywood stars like Kevin Spacey and Robin Wright.
Jonathan Friedland, Chief Communications Officer, explained to the New York Times, ‘because we have a direct relationship with consumers, we know what people like to watch, and that helps us understand how big the interest is