How Did Netflix Start?

By Annie Carter

Updated January 09, 2018

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Netflix is a popular DVD rental company that runs through the mail. No late fees make this system very popular with those who like to watch movies on their own schedule. Netflix also allows its users to stream movies on their computers and Netflix-ready devices. According to CNN Money, as of 2009 Netflix has over 8 million subscribers.


Reed Hastings started Netflix in 1997 after receiving a $40 late fee from a video rental store. He quickly began coming up with different ideas about how to create a mail-based movie rental business.

Trial Run

Hastings bought several CDs and mailed them to himself. He found it only took 24 hours and they arrived without a scratch.


After an unpopular non-subscription DVD rental idea, Hastings launched a subscription service with a free trial in 1999. When that first month was over, only 20 percent of those who began the trial didn’t convert to the paid service.


In 2003, Netflix became a profitable company and reached 1 million subscribers. Hastings knew at this point that the company was a success.

Second Wave of Netflix

In 2008, Netflix began offering instant online streaming of TV shows and movies to their subscribers who are on unlimited plans. Since then they have brought online streaming capabilities to blu-ray players, PS3, and Wii.