streaming media and netflix

Netflix is an American company that provides video rental and on demand video streaming by way of either the mail or streaming through the internet. The company was founded in 1997 in Silicon Valley California by Marc Randolph and Reed Hastings. The idea for this DVD rental service came about when Reed Hastings was charged with a late fee when renting a movie and he questioned why he should have a time restriction on how long he is able to rent the movie. In April of 1998, the Netflix website was launched and they developed the concept of unlimited rentals with no shipping fees or late fees.

In September of 2002, an article in The New York Times article stated that Netflix had around almost 670,000 subscribers. At the end of 2002, the company had one million subscribers and in 2006 they had close to 5. 6 million subscribers. After these first important milestones, the company’s growth became exponential. In the fall of 2004, a consumer filed a class action law suit against Netflix in Frank Chavez v. Netflix, Inc. The lawsuit was due to claims of false advertising in which the company said they provided “unlimited rentals” within a “one day delivery. ” Netflix denied making any mistakes within their advertising.

A month later, Netflix decided to give anyone who was a member before January 15, 2005, a membership renewal with one free month included. The final settlement came to around 4 million dollars. This caused a change in the Terms of use which went into effect in January of 2005 and the term “throttling” was created. Throttling is when the mail is delivered so fast that Netflix customers who pay for the “Unlimited” plan can send their discs back fast enough so they can receive enough shipments in a month in that the company’s actual cost of delivery will exceed the actual subscription fee.

This restricts the company from making any profits. According to a survey in 2008, the Netflix website brought in around almost 194 million viewers total. Earlier, in a 2010 interview with The New York Times, CEO of Times Warner, Jeffrey Bewkes, noted that the Netflix company contributed to the decline of sales of DVD’s in stores due to the increase of consumers paying for monthly subscriptions by way of Netflix. He was quoting about Netflix when he said, “It’s a little bit like, is the Albanian army going to take over the world? ” Netflix also clashed with the public hen they chose not to support their costumer’s using the software Linux. Linux is an operating system in which open-source software can be distributed freely on servers. Instead, the company chose to only support subscribers using Windows, Microsoft, OS X, iOS, and Android. In August of 2010, at the price of 1 billion dollars, Netflix decided to stream films through their online service from the studios MGM, Paramount Pictures, and Lions Gate. This will create additional options and selections of movies for members to choose from.

Deals and contracts with movie studios and premium channels are extremely important as they are what is going to keep the company afloat financially. In that same year the company decided to go international. They launched their online streaming service in Canada and then Latin America in the spring of 2011. Next, they expanded to Europe, Mexico, Central America, and South America. Lastly, they launched their services in the United Kingdom, Ireland, Sweden, Finland, Norway and Denmark. In May of 2011, Google released the Chrome plugin in which even Linux users could stream and view Netflix at their disposal.

In the summer of that same year, the company faced a major clash with their customers. Netflix decided to raise the price of using both the combined services of internet streaming and DVD-by-mail and separate the two services under different bills in a desperate attempt to raise money for the allowance of even more streaming content for their subscribers. This change infuriated the majority of the company’s customers. Netflix then announced that the two services would be separated and Qwikster would be created. Qwikster was the name that was supposed to be given to the newly separated streaming service.

Instead, three weeks later, an announcement was made that Netflix had changed their mind. They decided to go back on what they said and decided they were going to keep all their services under the one same name that everyone was already familiar with after all. Steve Swasey, a representative for the company was quoted saying, “We underestimated the appeal of the single Web site and a single service. ” This ended the creation of the idea of Qwikster but because of the confusing almost-name change that was soon reversed and the raised prices they lost close to 800,000 fewer subscribers.

This number of lost customers came to a shock to almost everyone. This was the first significant decline the company experienced and is a clear example of a company making a decision without considering the public’s interest and opinions causing a significant have an impact on their profits. Netflix is just one example of the impact of technology on American family life. Subscribers to Netflix can now video stream movies to their computers and television with one click. This shifts consumers from looking outside the home for entertainment to becoming more insular in their hobbies.

A recent article in the New York times cited how the former digital divide is closing and more poor American families are wired to use technology. This means that these families like the more affluent ones are spending less time together as a family unit. While access to the internet is considered a positive link for low income families it also can create other potential issues. While Netflix is not to blame for this is one of many contributing factors related to technology and the declining use of traditional forms of communication among community members.

Also, socially, Netflix has had a major impact on society. In a struggling economy where money is extremely limited for people, instead of paying a lot of money for a premium cable services, consumers have the option now to rent movies and television shows as well as stream them using computers or game consoles for around only ten to fifteen dollars a month. “I messed up,” CEO Reed Hastings admitted in an online blog, “I owe everyone an explanation. ” After the split between their DVD delivery service and online streaming, the Netflix stocks plummeted down more than a startling 40%.

Competing companies such as Redbox, another DVD rental service, took full advantage of Netflix’s changes. Redbox was finally given an opportunity to advance and gain more renters with Netflix’s major loss. Redbox has also taken a different strategy in which they use social networking to promote their services. They have almost double the amount of “likes” on their Facebook page verses Netflix’s page. Although the company made a major mistake by not listening to the public to begin with, they listened to them after the fact. Netflix admitted they made a mistake and tried to compensate heir costumers by not going through with the changes. In February of this year, Netflix stated that they are now expected to no longer have the rights to stream any movies or television shows from both Walt Disney Studios and Sony Pictures Entertainment due to a disagreement over renewing their contract with the premium cable channel Starz. Netflix promised it’s subscribers it would make up for the loss with new and different content. This summer, Netflix also added former Warner Brother’s Vice President Kelly Bennett to their team as the Chief Marketing officer.

Netflix has had a lasting affect technology on the way people watch movies and television. The estimated 12 billion dollar net worth company accomplished great success in the entertainment business industry. Instead of having to drive to the video rental store, Netflix created a convenient service with new technology in which their company has changed the way consumers watch and pay for films.

Works Cited

Arango, Tim, and David Carr. “Netflix’s Move Onto the Web Stirs Rivalries. ” The New York Times 24 Nov. 2010: n. pag. Cooper, Charles. “Netflix CEO: I messed up. ” CBS News. CBS News, 19 Sept. 2011. Web. 16 Oct. 2012. . Goldfarb, Jeffrey, and Reynolds Holding. “Incentives Play Role in Success of Netflix. ” The New York Times 9 May 2011, New York ed. : B2. Print. Liedtke, Michael. “Redbox’s Golden Opportunity: Higher Netflix Prices. ” Bloomberg Businessweek 31 Aug. 2011: n. pag. Web. 16 Oct. 2012. . “Netflix Inc. ” The New York Times. The New York Times, n. d. Web. 16 Oct. 2012. . Richtel, Matt. “Wasting Time Is New Divide in Digital Era. ” The New York Times 30 May 2012, New York ed. : A1. Print. Stelter, Brian, and Sam Grobart. “Netflix Raises Price of DVD and Online Movies Package by 60%. The New York Times 13 July 2011, New York ed. : B1. Print. Stelter, Brian. “Netflix, in Reversal, Will Keep Its Services Together. ” Media Decoder. The New York Times, 10 Oct. 2011. Web. 16 Oct. 2012. Stelter, Brian. “Netflix to Pay Nearly $1 Billion to Add Films to On-Demand Service. ” The New York Times 11 Aug. 2010, New York ed. : B3. Print. Works Cited cont. Wikipedia contributors. “Linux. ” Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, 12 Oct. 2012. Web. 16 Oct. 2012. Wikipedia contributors. “Netflix. ” Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, 16 Oct. 2012. Web. 16 Oct. 2012.

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