Everybody has heard of Netflix and chill, but that idea was popular before Netflix was created. People have been renting movies and watching them with their significant others and families since the creation of VHS video rentals and sales. Netflix started as a rental company then expanded to a major streaming company. Most people would rather be able to watch TV shows and movies where they want and when they want, not at a specified time that television company tells them they can catch a show or movie. This is just the latest form of entertainment, people have been going to plays, listening to the radio, then basic television and now you can stream almost anytime and anywhere.
As a consultant, a microeconomic analysis of Netflix will be conducted to ensure that the growth and development of the company is sustained and lasting. Included in this analysis is the history of the firm, the supply and demand conditions, price elasticity of demand, costs of production, overall market and the recommended path the firm takes in order to sustain success and further grow as a company in a competitive market.
Netflix was founded in 1997 when two men, Reed Hastings and Marc Randolph co-founded the company and provided movie rentals to people from an online database. Between 1997 and 2001, the company created the online website where people could rent DVDs, video games, or stream movies online through a system where users can choose the shows, movies or video games the interest them and created a subscription. Included in that subscription were unlimited movie rentals in which a user requests a movie, the company mails the movie, the customer watches the movie and then mails the movie back. Once the company receives the movie, the customer receives the next movie requested (About Netflix, n.d.).
Between 2002 and 2005 the company reached 4.2 million customers in the United States. Between 2007 and 2011, Netflix created a streaming system in which customers could watch TV shows and movies on their computer, Xbox, through internet connected devices, Blu-ray devices, etc. The ability to connect to Netflix became virtually endless which was incredibly successful. With being able to stream anytime, anywhere, and easily is great customer satisfaction. Finally, by 2016, Netflix expanded so much, it became a worldwide. Netflix is the world’s leading internet television network with 104 million members in over 190 countries enjoying more than 125 million hours of TV shows and movies per day, including original series, documentaries and feature films (About Netflix, n.d.).
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