It is no doubt that Netflix is one of the (if not the most famous) online streaming service where you can watch award-winning movies and many more. But did you know that once upon a time they were not the entertainment giant that are today?
They started out from nothing and just had a dream to make it easier for people to watch their favorite shows. Yes, the internet wasn’t even that good when they started and they were believed to be headed for massive failure. That’s why they were rejected by Blockbuster when they tried to sell their idea to them. Who knew that this would be Blockbuster’s biggest mistake?
In this article, you will learn more about Netflix’s humble beginnings, a strategic move they did to secure their success, and why Blockbuster made the biggest mistake that could’ve made them an even bigger company that they already were.
Netflix and The Advent of DVD Rentals
In 1997, two men in California, Reed Hastings and Marc Randolph had a small idea. At the time, Blockbuster was extremely popular—any shows you’d want to rent, they had it. They had a lot of branches everywhere and nobody dared to even challenge their business.
Hastings and Randolph decided that they wanted to make it easier for people to rent their DVDs (which was new at the time) and called their idea Netflix. At first, nothing really happened, as it took them until 1998 before they even sold their first DVD subscription.
They partnered with companies that produced DVD players and they started getting the attention of a lot of people. Netflix was slowly, but surely, becoming bigger than the small idea that they had. Netflix is amazing but what’s more interesting is something the founders did before launching their business.Embed from Getty Images
The Secret Behind Netflix
Netflix was just an idea, but looking at their history, it would seem that the two founders thought that somehow, their business would take off. At that time, sure, they didn’t really see that they would end up becoming a popular streaming service, but they did what they could to protect their brainchild.
If you look at their records, Netflix filed for a trademark on their name a year before they even started launching their DVD rental service. Most business wait until they become successful before they make any move to protect their brand, but Hastings and Randolph did it since day 1. This may be one of the reasons to their success, because if they hadn’t trademarked it and someone else decided to register a similar name, we wouldn’t have the Netflix we have today.
The Colossal Blockbuster Mistake
In 2000, Netflix was already a 2-year business that was making huge waves in the DVD rental service industry. Founders Hastings and Randolph decided that it may be wiser to just sell their business to Blockbuster, so that they may venture into other business options. Perhaps they thought that they couldn’t compete with the rental giant? Or did they just want to try something else? Who knows.
So off they went to Blockbuster, and as Hastings wrote in their book No Rules Rules: Netflix and The Culture of Reinvention, they were off to a rocky start and the best decision was to sell the company to Blockbuster, then a 6 billion dollar giant. They were planning to sell their business for $50 million, and they were sure that it was a good deal for everyone.
It didn’t turn out they way they wanted to as Blockbuster rejected their offer and CEO John Antioco was said to have smirked during the meeting. Who knew that Netflix would wipe the smirk off his face 7 years later, when they shocked everyone with their streaming service.
Now, Netflix has become the giant that Blockbuster was years ago and is currently worth over $125 billion. Blockbuster on the other hand, has only one surviving branch and is only worth $37 million, a huge crash from what they were worth back in the ‘90s. If only they had bought Netflix, they would have been bigger, but who knew? The company’s direction could’ve taken a different turn had it been managed by someone else.