Netflix: From mailbox movies to media mogul

On Sept. 17, Netflix became known as more than just a service that feeds procrastination. With its 51 Emmy nominations and 20 total wins leaving them second only to HBO, Reed Hastings and Marc Randolph’s undeniable media revolution has come full circle.

From humble beginnings

Founded  Aug. 29, 1997, Netflix first served as a movie-through-mail rental service. From these humble beginnings, the innovative streaming service now has over 100-million subscribers in 190 countries, a 25 per cent increase from last year. Their business model of low-cost access to the world’s favourite shows and movies has allowed the company to grow into a media empire that now produces a slew of original programming, and to enthrall the public in the pastime of binge-watching, a phenomenon more addictive than cell phones, Facebook and Candy Crush combined. Putting the viewer in as much control as a network executive, everyone with a Netflix account now has their own personal television channel, all for only $8 a month.

And according to Dr. Jamie Gillies, a political scientist and communications professor at St. Thomas University, its success extends beyond the numbers.

“Netflix succeeded in finding a more efficient way to deliver television and film content than through cable … They have then transferred that from a way to watch whole seasons of television that had already been aired by other networks … to an original content producer and provider actually making shows that the public wants to see,” said Gilles.

 

How far can they go?

The question that now faces Netflix is the sustainability of it’s growth.

An LA Times article reported that the site was $20.54-billion in debt. That stat was later corrected after a statement from the company explained that $15.7-billion of said debt was projected expenditures of upcoming, unpaid projects that had not yet been processed through their payroll. This  leaves Netflix with an estimated $4.8-billion in gross debt, which raises questions about the sustainability of their business model.

An overlooked concern is that many of Netflix’s critically acclaimed shows are licenced through mainstream companies like Media Rights Capital (House of Cards), Lionsgate (Orange Is The New Black) and Sony (The Crown). Per an article by Investopia in 2015, Netflix will spend around $6-billion in new and renewed licencing by 2018.

“Its sustainability will be based on growing the subscriber base and the continued licensing of access to Netflix as a platform,” Gillies said.  “It should grow, given the number of people abandoning cable, but whether it is sustainable over the long run will likely depend on how far ahead Netflix stays in terms of its streaming technology and infrastructure.”

Gilles added that it probably won’t be long until Netflix is a top player in both media creation and production. Netflix is currently the 10th largest internet company in the world with an estimated net worth of $70-billion.

 

 

 

 

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