Netflix might be the world’s biggest streaming service, but once upon a time it almost met a totally different fate.
One major mistake saw the streamer lose almost one million subscribers in a single quarter, while tanking its stock price.
The launch of one particular series, however, propelled the company to new heights, with it being worth a huge $366 billion today.
Here’s how Netflix almost lost itself completely, and the incredible comeback that followed…
Netflix’s history pre-streaming
Netflix began life as a mail-order DVD service, founded by Marc Randolph and Reed Hastings in 1998.
Established in the midst of the dot com bubble, it offered a web-based catalogue of movies for subscribers to browse.
A year in, the CEOs implemented a subscription-based model, allowing customers to rent, receive and return unlimited discs per month by mail.
And by January 2002, the online DVD rental site had 500,000 subscribers, which increased to 700,000 by the end of the year.
That figure had grown more than five times over by 2005, with 3.6 million paying customers – so there was clear demand for DVD rental.
Move to online streaming
Netflix’s most popular feature – streaming – wasn’t launched until 2007, which is hard to imagine now. (The streamer didn’t launch in the UK until 2012, which is even harder to believe).
Anyway, 2007 marked the start of a shift away from the traditional DVD rental format.
But in 2011, Netflix made a major change which very much almost killed the business.
DVD and streaming subscriptions were separated, and their prices upped.
A $10 all-in-one package was now two $8-plans, effectively dropping a 60 percent price increase on customers – in the midst of a massive recession, no less.
For good measure, the company was then renamed Qwikster – not quite so catchy, is it?
Subscriber exodus
The change seriously angered customers and had a devastating impact on the business.
Qwikster lost 800,000 subscribers in a single quarter, while its stock price tanked by almost 80 percent, from $300 a share to $65 by the year’s end.
Bosses responded swiftly by scrapping the name and issuing a public apology. The damage was already done, though, and a tough 18 months followed.
How Netflix Originals saved the platform
In a bid to rebuild from its mistake, Netflix paid especially close attention to customers’ demands.
Among them was more original programming – and, boy, did the company deliver…
The company had started putting in the groundwork for its original TV shows in 2010, and by 2013, it was ready to bask in the fruits of its labor.
Its first ever original series, political thriller House of Cards, released that April, earning critical acclaim and numerous award nominations.
Its formula – an intense drama, plus big Hollywood names like Kevin Spacey and Robin Wright – was a winner.
Jonathan Friedland, the company’s chief communications officer, told the New York Times that ‘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 going to be for a given show.’
He added: “It gave us some confidence that we could find an audience for a show like House of Cards.”
The Originals legacy
House of Cards proved that big names – and even bigger budgets – were yielding success for the platform.
People were willing to sign up for quality, original content and the proof was in the numbers.
The platform gained 9.9 million subscribers the year House of Cards debuted, bringing its total number to 35.6 million.
Now, around 55 percent of its US library is made up of original content, including Stranger Things, The Crown, Orange is the New Black and Squid Game.
In fact, the top 10 most-streamed Netflix shows of all time are all originals.
The company shows no signs of slowing down, either.
Last summer, it gained a further eight million subscribers, partly off the back of the successes of Bridgeton season three and British thriller Baby Reindeer.
And as of September 2024, Netflix had 282.7 million paid subscribers worldwide, while its share price is currently $863.60 – a far cry from its 2011 crash.
