Address:
100 Winchester Circle
Los Gatos, California 95032

Phone:
(408) 540-3700

Year Founded:
1997

Total Annual Sales:
$3,609,282,000

Senior Executives:
Reed Hastings- Founder and CEO

Netflix began operations in 1997 by offering customers a new type of service, DVD movie subscriptions to be sent through the United States Postal Service.  Quickly, Netflix became the fastest-growing customer of the USPS.  Meanwhile, Blockbuster was slow to perceive the competitive challenge of Netflix and even slower to react.  This essentially was the beginning of the proverbial end for the one-time category killer, which had dominated the video rental scene the decade before.

More recently, in 2011 Netflix announced its decision to restructure the company based on the newly, rapidly rising popularity of streaming videos.  Company executives believed streaming technology was the future of their movie and TV show rental business.  Certainly streaming is more efficient, cost effective and timely than mailing DVDs.

The company announced a rebranding of its DVD division along with a separation from its streaming service, which the company saw as its long-term future staple.  The new DVD division would be known as Qwikster.  It would operated through its own unique website and even be billed separately.  The separate billing would actually serve to significantly increase monthly fees for the many customers who used both services.

This resulted in an immediate customer backlash.  The new pricing scheme was not only more expensive to many, it was also confusing.  The Qwikster website kept experiencing delays before it could be launched.  The site was essentially a motionless sign asking people to wait and be patient.  It never actually got off the ground.

Just over a month later Netflix announced that it had lost 800,000 subscribers during the quarter.  The price of the company’s stock essentially tanked and experts predicted that this fiasco would eventually become a college course in marketing disasters.   Some wondered if the company would recover.

Company founder Reed Hastings came to the forefront of the crisis.  After issuing a well broadcast apology to his customers and stockholders, he announced the abandonment of Qwikster and a return to business as usual.  These efforts eventually returned the company to the good graces of its public and were seen as a textbook case for a well-designed recovery from near disaster.

Netflix has gone on by continuing to innovate, including the launching of its own productions of what are essentially well written and produced TV series.  These are issued both through streaming and DVD.  An entire season is issued on one day, leaving the options of viewing entirely in the hands of the audience.  Early series have garnered enviable viewership and have won numerous awards along with critical acclaim.

This year, Chain Store Guide celebrates its 80th anniversary. In honor of this occasion, we are hosting a monthly series of editorials called “Chain Store Guide Through The Ages”, starting with the 1930s. We will take a look at what was happening in that time and how it affected the industries we now serve. Our Company Snapshots will examine companies from that period and see where they are today.

*Image courtesy of: Coolcaesar via Wikimedia Commons