Get in touch with technology with tech Stuff from how stuff Works dot com. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm an executive producer with how Stuff Works in the love of all things tech, and we have made it. You and I together, we have crawled through the history of Netflix, and we are in the final for now at least chapter of that history where really I'm looking at the formative experiences and years of Netflix. Uh, when we get past a certain point, we'll be doing a lot of skipping forward because it ends up being sort of the story of they did more of what they just did, but with more money. That tends to be the theme of the last few years. However, in the last episode on the History of Netflix, I gave a rundown of how Blockbuster had a fighting chance to catch up to Netflix's model of online DVD rental after lagging behind, and they had introduced a feature called total Access, but the new CEO of Blockbuster, the incoming CEO, changed the direction of the company to focus back on traditional brick and mortar stores, and as a result, Total Access was discontinued. In that vacuum, Netflix was able to flourish in that online DVD rental space. They no longer had a major competitor. The closest was red Box, which was on the rise, but they had a totally different approach to DVD rentals, and they were at least initially targeting a different demographic, so that wasn't as big of a concern at least initially. So Netflix was really able to kind of grow without having to worry about an opponent taking them down. Now, to start this episode, we're actually going to backtrack just a little bit. In that last episode, I got up to two thousand eight, but for this part to talk about the streaming side of Netflix's business, because the last time it was mostly about the DVD side, we have to go back a little bit to two thousand six because it was September two thousand six when Amazon launched a service it originally called Amazon Unboxed. That was the name of a digital video download service. You could purchase movies and TV shows off Amazon and then download them to a device to watch. I would later evolve into Amazon Instant Video, and then Amazon would eventually transition away from offering video downloads and then focus instead on delivering streaming videos, so you would be able to watch that content. It would remain in your library if you if you actually purchased it as opposed to rent in it, and you could watch it whenever you wanted, as long as you were logged into your Amazon account. But the video would quote unquote live on Amazon servers, you wouldn't download it to your machine. Early on, this was not a direct competitor to Netflix's streaming video service, because again, this was more of a download a purchase process, and Netflix had already gotten out of that market in two thousand five. However, it would become a major competitor later on, and then on March twenty, two thousand seven, another competitor rose up. That's when NBC Universal and News Corps held a joint announcement for a new online service that they were going to call Hulu. The service would not go into beta testing until the fall of two thousand seven, so this was a preliminary announcement, and the official debut of the website to the general public happened almost a year later, actually, and in March of two thousand eight. This was a big deal for Netflix and it's streaming strategy. It was a real alternative to what Netflix was doing now. For one thing, the reason why this was a big deal and a potential threat is that Netflix is an independent company. It is not part of a larger conglomerate that owns content studios. Hulu, however, represented a joint venture between lots of different partners, including NBC Universal, which includes both NBC the broadcast company and Universal Studios, and also news Core, which includes the company's Fox Broadcasting and twentieth century Fox. Hulu would have a huge advantage in that the companies that were making the content we're also responsible for bringing to life this delivery system. So it was not a big stretch to guess that those companies would favor sending their content to Hulu rather than to Netflix, and that they would leverage this to make an advantage and take away some of Netflix's power. Well. Complicating matters was that Disney Studios, through its subsidiary ABC, would announce that it was going to take a steak in ownership of Hulu in two thousand nine, and while News Corporation would transfer its steak to twenty first Century Fox, the fact Disney then moved to acquire twenty first century meant that the major players were pretty much the same um. Some of the ownership was switching, but it wasn't like a lot of new players were coming in. Also, Comcast would announce an intention to acquire a majority stake in NBC Universal in December two thousand nine, which might have seemed like all these big major players in creating movies and television, we're starting to align against Netflix and Netflix's plan for streaming content. Other partners in the venture, at least initially, would include a O. L. Facebook, my Space, which was still a thing back in two thousand seven, and Yahoo, which you could argue was also still a thing in two thousand seven. Fun side fact, hulu dot com had actually existed since as a website, but it wasn't associated with streaming video, so what was going on. Originally, hulu dot com belonged to a woman named Amy Hung, who used it as a personal blog site. NBC would purchase this site sometime in two thousand seven, and it was Hung who had said that the name Hulu was her reference to a Chinese word for gourd, and that people in China would hollow out these kinds of gourds in order to store precious things inside them, so it was a container for precious things. When the Hulu dot com streaming site launched and allowed people to sign up in October two thousand seven, it included that definition. It was actually an expanded version of the definition, and it raids verbatim. Here we go. Quote in Mandarin Hulu has two interesting meanings, each highly relevant to our mission. The primary meaning interested us because it is used in an ancient Chinese proverb that describes the Hulu as the holder of precious things. It literally translates to gourd, and in ancient times the Hulu was hollowed out and used to hold precious things. The secondary meaning is interactive recording. We saw both definitions as appropriate bookends and highly relevant to the mission of Hulu. End quote. When Hulu launched, it worked in a fundamentally different way from Netflix. So Netflix would offer a digital distribution through a subscription service, and originally it was an add on to DVD rentals. It didn't exist as its own individual offering for at least not at first. Hulu did not offer up a subscription service. Initially, on Netflix, you could watch films and TV shows commercial free. On Hulu. The videos were ads supported so you would get one or two commercials either before, sometimes inserted into the middle of the content you were watching. Netflix would offer up entire seasons of shows for whatever available titles it had, although they tended to be older shows, or they were older seasons of shows, not the most recent ones. Sometimes it might be not be the most recent two or three seasons. Hulu offered up several recent episodes of currently airing shows, so usually it was five. You get the five most recent episodes, and then sporadically you might get access to earlier seasons of those shows. Uh As new shows would debut, new episodes would debut on television about a few days maybe a week later, they would find their way to Hulu and they would knock off the oldest of the most recent five episodes off the list. So once you got the episode six of a new show like It's just airing that year, then when episode six would move over to Hulu, it would knock off episode one, and then you would just have episodes two through six to view. So if you did not keep up with it, you would eventually lose the ability to watch those earlier episodes until maybe much later, when an entire completed season would join Hulu. So Hulu would later introduce a subscription service which was also ad supported, which got a lot of people upset. They thought, if I'm paying a subscription, why am I also forced to watch commercials? But that would increase the number of pieces of content viewers could access. The more recent episodes wouldn't drop off necessarily. You might be able to stick with a show all the way through a season and be able to watch those earlier episodes and later. Still, it would eliminate that free service entirely, and the only way to view Hulu content would be to become a subscriber. Now, all that is to say that Netflix is future, and digital delivery was not certain. The DVD rental business would eventually decline as the format itself would fall out of favor, with more customers shifting to digital alternatives. That writing was on the wall. Everyone could tell that sooner or later, this physical medium is going to reach a level where is no longer profitable to operate this rental business. There will still be devotees of the medium. There's still gonna be people who prefer DVDs and blue rays to streaming media. That makes sense, But there may not be enough of them to support a business. The debut of the Blu Ray and the HD DVD formats in the mid two thousand's shifted things a bit. It extended the life of physical media. Netflix actually would carry both Blu Ray and HD DVD until Netflix, like everybody else, realized that Blu ray was going to win out over h D DVD. The company would dump the h D DVD format in early two thousand eight, as did everybody else. So where did the company go from there? Well, first, it started a transition to the cloud. In two thousand and eight, Netflix's servers encountered a massive database corruption problem, and that messed up Netflix's ability to track and send out DVDs to customers. Operations had to be suspended for three days while Netflix engineers frantically tried to fix the problem. That whole mess decided or lad Netflix's executives to decide that the best thing to do is to shift away from operating their own data centers and instead moved to a really reliable cloud based service, and the one they picked was run by Amazon Amazon Web Services. That process of transitioning from their own data centers to Amazon Web Service would take several years to complete. It's starting in two thousand eight, it really didn't finish until about so this was not a quick process. It takes a while to migrate systems and do so away where you don't interrupt services. Netflix also signed content licensing deals with various studios, sometimes at a bargain price. Many executives were skeptical that online video would be able to survive, which might have contributed to some negotiations and Netflix's favor So Netflix landed a distribution deal with the premium channel Stars, for example, to carry a lot of the movie titles that Stars had the rights to, and the agreement was for twenty million dollars for two years, which is a lot of money, but it's actually not unreasonable for one of these licensing deals, especially if you compare it to something like the eight hundred million dollar deal Netflix signed with lions Gate MGM and Paramount for a five year licensing agreement. That deal prompted everyone from directors to actors to producers to also get involved in this process because they had a direct interest in this. They wanted to know, how are we going to get compensated for our work being displayed over this new medium. What what are the rules here? Because if I get residuals, how is that determined through this online service? It was a chaotic, messy time. Another thing that could have worked and may have worked in Netflix's favor, is that at that time, the big studios were looking at it as if it were a small cable distributor rather than a nationwide entity. They weren't. They're kind of underestimating Netflix in other words, But that changed as the subscriber base for Netflix would grow each year and by Netflix nearly had nearly as many subscribers as the cable company Comcast did, and by then Netflix had landed several multi year licensing agreements, and at that point the studio said, oh, we may have contributed to the growth of a real giant. And now they have clout, they have subscribers, and if we end up not coming to terms with them, and then the company turns to their customers and says says, we would love to bring you X movie, but because the studio refuses to license their work to us, you aren't going to get it. Then people might turn against that studio. And by this time, by the time they made the realization, it was kind of too late. Well, I've got a lot more to say about Netflix, but first let's take a quick break to thank our sponsor. Now, around this time, there was also a culture shift that was starting to happen and one we still talk about today, and this was the growth of the cord cutters and the emergence of the cord never's. These are populations that represent people who ended their television service, their pay TV service, whether it was cable or satellite, or they never bothered to sign up for one in the first place. Some of them would still watch television programming, but they did it through things like over the air antennas, so they're not paying for the content, They're just getting whatever is being broadcast over the air, or they were getting it through digital streaming on a computer or enabled set top box, so they were getting it delivered through the Internet, but not through the traditional satellite or cable systems. The growth in cable subscribers began to slack off, and occasionally they would actually decline in the number of subscribers, not just slow growth, but see reverse growth. They'd see people leaving these subscription services. The trend seemed to validate the Netflix corporate strategy Another battle Netflix had to wage was directly related to the popularity of the company's streaming service. As more customers began to use Netflix to not only rent DVDs but also stream movies online, the percentage of traffic on the Internet related to Netflix grew. Netflix was the source for sixty percent of all the streaming movies online. All the other services combined would make up the other four and according to several analysts, Netflix traffic accounted for twenty of all broadband traffic in the United States. Now, this was something companies like Comcast didn't care for very much. For the most part, companies that owned infrastructure on the Internet, as in like the actual series of tubes, if you prefer, they had an understanding the They would have these agreements in place, and the agreement said, all right, I will carry data that's coming from your side of the Internet, if you in turn carry data that's coming from my side of the Internet, and as long as it matches up with the amounts that we have agreed to, no one charges anyone any fees. And if it goes beyond that, then we start talking about metering that data because I'm going to be carrying more of your stuff. Then you're carrying a mine. I need to be compensated for that. So this is called peering agreements. It's a foundational part of the Internet, and it's also one of the basic concepts of net neutrality. This idea that these peering agreements are what allow massive amounts of data to pass across the Internet without getting throttled or having surcharges put on top of them. And in two thousand ten that concept was put to the test and continues to be to this day. The major players in this matter at the time were Netflix, Comcast, and a company called Level three Communications. Now Netflix, I know you guys know because I've been talking about them for three episodes before this, and if you have not listened to those, it's odd that you would listen to a part four. First go back and listen to parts one through three. Comcast is a cable company and internet service provider in the United States. But you may not know what Level three Communications is. A lot of you probably do know because you're really tech savvy, but some of you might not. You might be like me, and it might be one of those things that you understood later. Well. Level three Communications is one of the companies that owns and operates the infrastructure that we call the backbone of the Internet. They own parts of the Internet connections that other traffic will travel across as it goes from one network to a network. Because remember the Internet is a network of networks, so comcasts network which connects customers to the rest of the Internet. This backbone we're talking about will send traffic across the backbone and receives traffic coming from the backbone and then sends that onto its customers. One way content companies are able to deliver content to users, no matter where those users might be within the service area is to build out what is called a content delivery network. This is a system of servers that a company distributes in various regions, and when customers access the online service, they connect to the server best suited to give them the fastest response. So, if you've played online video games, you're probably familiar with logging into a specific server. Those servers are typically organized via region, and generally speaking, if you log into a server that's closest to you to wherever you happen to be geographically, you tend to have things like the fastest response time, less lag, things that are really important. If you're playing a game, those same things are really important. If you want to watch high quality streaming video, you want there to be as little delay as possible. Customers hate it when they have to sit there and watch a buffering logo show up and they wait to see their video content. That that's not a good experience. So Netflix would do this. They would use these content delivery networks in order to make sure that customers would get a good experience when viewing films and TV shows online. Before Netflix reached an agreement with Level three Communications to have Level three take on this task for them, a different CDN company called a com I did that job a k A m AI. So in this agreement, Comcast would actually charge a COMMA to deliver traffic to Comcast network, and a com I did not own Internet infrastructure. It was able to set up these content delivery networks, but it was not appear in the traditional sense of the peering agreements. So that's why Comcast could charge a coma I for this. It wasn't like it was this mutual relationship where Comcast would send data across servers belonging to a COMMA and vice versa. It was a one way relationship, which meant that Comcast was metering it it was charging a comma I. Well, then Netflix, which is over to Level three Communications, they take over Netflix's delivery, and things changed because Level three is a peer and had an existing peering agreement in place with Comcast. Now, the agreement would actually allow Level three to send twice as much data to Comcast as Comcast could send to Level three, So it's a two to one relationship. So if Comcast can send one units, then Level three could send two hundred units back and it was considered to be even in the eyes of the agreement. That means that twice as much traffic end up being equal traffic. But Comcast argued that this Netflix deal would mean that Level three would start sending five times as much traffic to Comcast and that would exceed this period agreement. So Comcast also wanted to charge Level three the same way it had been charging a comma I for sending this Netflix content to comcasts network, because otherwise it was going to get cut out of that revenue that was part of the you know, Comcast revenue plan. Level three argued that Comcast was trying to wriggle out of net neutrality, and Comcast argued that Level three was inappropriately claiming that this was a net neutrality issue when in reality it was appearing issue. And I'm not a big support of Comcast, but i do feel like the company had a bit of a leg to stand on in this particular argument. If the peering agreement was for a certain amount of traffic and Level three was going to exceed that, then by my estimation, Level three should have been expected to pay a meter rate, and it didn't matter where the data came from. It wasn't that specifically came from Netflix. It was that the amount of data was exceeding the agreement. Whether that came from Netflix or from a spreadsheet doesn't really matter. But that would also mean Level three would likely have to pass those expenses onto Netflix, which would then of course pass those expenses on to customers, and that would have been a pretty negative experience all around. The fight would stretch for years with worries that Comcast would end up throttling Netflix traffic, not because it was Netflix necessarily, though that service did compete with comcasts own Internet video delivery services that it provided to its customers, but rather because as level three would be in violation of that agreement. Netflix ended up extricating itself out of this problem in and that's when it was announced that it was going to pay Comcast for a direct connection from Netflix servers to Comcasts network, So they were no longer employing anyone else to become a content delivery network. They were essentially doing it themselves and paying Comcast for the privilege. But the bigger dispute reached something of a resolution in two thousand fifteen, just a short time before the FCC was to start hearing complaints under some new net neutrality rules, rules which I should add have since been overturned by the most recent FCC leadership, So the mess keeps on going. Meanwhile, on the executive side over at Netflix, read Hastings was apparently becoming less approachable. According to the book Netflix, which I have cited several times in these episodes, it was getting harder to change hastings mind about things. He would make up his mind on something, and challenging his ideas was becoming more and more difficult to do. Some of his top executives would leave around this time. They saw a very little opportunity to grow at Netflix. They saw a little indication that they would have a shot at leading the company themselves, and figured that they pretty much achieved their goals that they set out to do when they joined Netflix. Things like fighting off Blockbuster or launching a digital videos uh you know service. Those things had happened already, so rather than just sit around, they decided to leave and take on new challenges or even retire. On November twenty ten, Netflix really showed off how it believed the streaming service was going to be the future, because for the first time, they would offer customers the option to subscribe to just the streaming part of Netflix's service without the requirement of having a DVD rental service on top of it. Because up to that point it was an add on. There was no just streaming option for the subscription, but in suddenly there was. This new service would cost seven dollars nine cents per month when it launched, and the combined plan of unlimited DVDs and streaming went from eight dollars and nine nine cents a month to nine dollars a month at that point. Hastings even said that the press release that Netflix was now quote primarily a streaming video company delivering a wide selection of TV shows and films over the Internet end quote. Netflix finally began to expand its streaming services internationally. First they began to offer service in Canada and then later in Latin America and the Caribbean in late two thousand eleven, and that was also when Netflix announced what would be the beginning of its next serious move and changing the landscape of entertainment. The company announced it would be the exclusive distributor in the United States of a television series called Lily Hammer, which originated out of Norway, and perhaps more import lee, they also announced that they were developing their own original program. Netflix was playing the part of a TV studio. They were actually producing a show, not just streaming a show, and the first original program was an adaptation of a TV series that had been on UK television in the nineteen nineties. That adaptation would change the time and place of the story, switching from the the days of the nineties over in the UK to modern day United States, and this series was called House of Cards. But while new original content from Netflix was exciting, that wasn't the two thousand eleven story that got customers talking and shouting and leaving nasty comments and canceling their subscriptions. Nope, that honor would go to a little scandal or kerfuffle. I guess is a better word called quick ster. I'll explain after we take a quick rake to thank our sponsors. So quick stir well, here's the down in dirty details. Netflix's business was in two really big categories, and one was the DVD rental business that was getting more expensive to operate. Postage fees had gone up, blue rays were more expensive than DVDs, and so it was getting harder to make that a cost efficient, profitable business. Meanwhile, there was the streaming services side of the business, and that was clearly the future for Netflix. That was where things were going to ultimately end up. But the DVD format and blue rays hadn't died. There were still a lot of people who preferred the experience of watching movies on that physical media. And there were titles in Netflix's DVD library that you could not find in the streaming library due to licensing issues. So Netflix could go out and buy copies of a movie and then offer them up for rent, but they couldn't take necessarily those exact same titles and put them up for streaming because it went it was the difference between renting a physical format and broadcasting content. Because of that, you would always find a much more broad and deep selection of television shows and films in the DVD side than you would in the streaming side. So it didn't seem feasible to just kill the DVD side of the business entirely, but it was getting more challenging to operate both sides of the business simultaneously. Netflix had also raised the prices of its joint DVD and streaming plans to sixteen dollars a month at that point, and that was a heck of a jump, and this was in a recession. The decision would affect half of Netflix's subscribers in the United States who are under this joint plan, so about of all Netflix customers had both DVD and streaming subscriptions tied together, But people who subscribed only to DVDs or only subscribe to the streaming service, they would have actually seen a price cut in this approach. However, the focus of this announcement was almost exclusively on the price jump for the people who had a joint account like the joint DVD and streaming services and Because of that, Netflix was getting a lot of bad press and customer complaints. So there was a new idea, one that a lot of people inside Netflix did not like, but read Hastings was very gung ho on going forward with this idea, and that idea was to split the two businesses apart and make the DVD side of Netflix its own company and calling it quick Ster. It would have its own internal corporate structure, it would have its own CEO, it would be free from the streaming business of Netflix. But that also meant it would be a huge change to customers. It meant that the combined plan of DVDs and streaming would become more complicated. Each company would have to maintain its own cues and customer profiles. So if you wanted to have that that joint service of DVDs and streaming video, now you were going to have to have two accounts. You're gonna have a Netflix account and a quick Stot account. You have two subscriptions to payments, two different cueues. Uh. If you were let's say that you had a queue in your streaming service and you had a queue in the DVD service, and it turns out one of the movies that's on your DVD list becomes available on streaming, and you watch it and streaming, and then your next DVD shows up and it happens to be the same movie. That would be a really frustrating experience, especially since it had originally both come from the same company. People were not happy. Netflix also was not very good at communicating why it was doing this in the first place, and the main reason was to allow the DVD side to focus on delivering rentals with a deep library and do it efficiently and with a profit in mind, while the streaming side could dedicate more resources like time, energy, and effort to building out its library and making new content. Most coverage at the time criticized how Hastings communicated these changes. He actually did it by shooting a short video that the company had produced independently. UH. Against the wishes of a lot of the folks in his executive team, he did this, and it became another notch in the argument that read Hastings was just not very good at communicating with his customers or understanding where his customers were coming from. He would eventually reverse this decision, and he would bring the DVD business back under Netflix and UH and just abandoned the idea of Quixter, and that took about a month. They had not yet really spun out Quixter. They had announced the intention to do this, but they ultimately decided that that wasn't going to work after they got a massive negative reaction from customers and a lot of people lost their jobs in the process because in the preparations for making this move, there were people who were brought on or transitioned over to new roles. They were going to fill new positions under Quickster, but now Quixter was gone, those positions were gone, and so people found themselves out of a job they had they had switched over, and they didn't have a job to go back to over at Netflix. So it was a really big misstep for Netflix and for Hastings, but the company was able to recover. It expanded in two thousand twelve by launching services in Europe, and in April two thousand twelve, Hastings and Netflix would fund a political action committee or pack called flix Pack, and this is a lobbying group. It contributes money to the campaigns of politicians who would support legislation that was in favor of net neutrality. For example, or that they would vote against any legislation that would pose a threat to Netflix's business. So Netflix became a real political entity at this point. On December two thousand twelve, Netflix went dark in North America, and not on purpose, so this is Christmas Eve, two thousand twelve. The streaming service went offline for several hours and the root of the problem was with the elastic load balancer service on Amazon's cloud platform, so there was really nothing Netflix could do at this point. There was an error on the Amazon cloud service, and this was when Netflix was still in the process of transitioning over to Amazon's platform. In August, Netflix introduced a concept it had previously implemented in its DVD rental business, which was profiles. With profiles, a household could have multiple cues to represent the preferences of each member of the family, so Dad could have one queue of content, Mom could have another, you know, etcetera, etcetera. One two fifteen, the company announced an incredible seven to one stock split that meant that for every share of stock in Netflix you owned, you would get six additional shares. The share price would reduce down to one seventh of their former value. And I talked about this in an earlier episode, but really quickly. This approach increases the number of shares, but it decreases the price per share that maintains the same company value throughout the process. But it's also a way to encourage small investors to get on board because the price for an individual share of stock is lower than it was before. Netflix also would launch streaming services in Japan, and in ten at CS Netflix announced it would enter one thirty new markets across the world, so it was really growing quickly last year that being seen. At the time of this recording, the research firm p WC sent out a survey to learn more about how people were getting their entertainment, and according to their survey results, seventy three percent of responded said that they were pay TV customers, so cable or satellite or something like that responded said they subscribed to Netflix. So the same number of people not necessarily exactly the same people, but the same number of people were now Netflix customers as they were for any sort of pay TV customers. So this survey suggests that the US means that streaming is really the direction that we're moving in. If we've gotten to a point where there's an equal number of people subscribed to Netflix as there are for any given pay TV service, or all of them collected together. That's pretty big news. Meanwhile, there are these other competing services out there. You've got Hulu, Amazon Video, You've got the upcoming Disney streaming service. Those are all muddying the waters and making things more complicated. No service can boast having all of another services offerings plus more. So in other words, you're not going to go to Hulu and see, oh, you have everything Netflix has plus this other stuff. Where you go to Netflix and say, oh, you've got everything, Amazon Video has plus this other stuff. No one has everything. So it's quite possible that if you want to see certain programming, you're going to have to subscribe to multiple services that you know, you might say, oh, I really want that show and I really want this other show, and unfortunately they're both exclusive to different services. Well, you have a little option but to subscribe to both of those services. And this is getting pretty messy as we're seeing more of these services pop up. It requires more decisions on the part of the customer, and a lot of people aren't really thrilled about the idea of having to sign up to multiple services, so that is becoming a bit of a complication. And then you also have premium channels like HBO having their own competing services. So while there may be a desire to cut the chord, the alternative seems to be that you're gonna have to subscribe to two or more services to get what you want, unless you just happen to except that the limited options of any one service are exactly what you need. Netflix is also really big on original programming. There's no surprise there. They don't have to pay licensing fees and it gives them an advantage over competing services. So according to indie Wire, which cited an unnamed source, Netflix is releasing around eighty two original movies in ten and seven hundred new or exclusively licensed programs. The content budget for Netflix is an estimated thirteen billion dollars in and some of that original programming gets both critical acclaim as well as an eager reception from Netflix customers. In seventeen, the company garnered nine one Emmy nominations from its original programming, as well as eight Academy Award nominations for their original films and even one an Oscar for Best documentary feature with Icarus, so not everything on Netflix is fuller house, thank goodness. And it looks like in the near future, Netflix is going to focus on sports docuseries as another area to expand in. So the company continues to pour money into original programming and to add more to its features. It grows in more regions, so it's it's opening up more streaming services across the world, and I expect it will continue to be a pretty major player in entertainment for at least the near future. When will we see DVD rentals go away? Who's to say? I think it's gonna be a while. Read Hastings actually joked that he would make sure he would personally deliver the very last DVD that they ever rent and that would probably be sometime in Whether or not that prediction remains accurate, that's we got to wait around see. But that wraps up the story of Netflix so far. Obviously, the company continues to exist, so I'll probably have to do more episodes either specifically about Netflix or related to it in the future. But I think we've talked about it enough with four episodes back to back, right, So we're gonna come back in our next episode about a totally different topic, and I look forward to chatting with you guys. Then, if you have any suggestions for future episodes, maybe it's a company or a technology or a person in tech. Maybe there's someone I should interview, send me a message, let me know. The email address for the show is tech stuff at how stuff works dot com, or drop me a line on Facebook or Twitter, or the handle of both of those is tech stuff h s W go check out our merchandise or at t public dot com slash tech stuff that's t e public dot com slash tech stuff. Every purchase goes to help the show, and we greatly appreciate it. And don't forget pollow us on Instagram and I'll talk to you again really soon for more on this and thousands of other topics. Is it how stuff works dot com m

Get in touch with technology with tech Stuff from how stuff Works dot com. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm an executive producer with how Stuff Works in the love of all things tech, and we have made it. You and I together, we have crawled through the history of Netflix, and we are in the final for now at least chapter of that history where really I'm looking at the formative experiences and years of Netflix. Uh, when we get past a certain point, we'll be doing a lot of skipping forward because it ends up being sort of the story of they did more of what they just did, but with more money. That tends to be the theme of the last few years. However, in the last episode on the History of Netflix, I gave a rundown of how Blockbuster had a fighting chance to catch up to Netflix's model of online DVD rental after lagging behind, and they had introduced a feature called total Access, but the new CEO of Blockbuster, the incoming CEO, changed the direction of the company to focus back on traditional brick and mortar stores, and as a result, Total Access was discontinued. In that vacuum, Netflix was able to flourish in that online DVD rental space. They no longer had a major competitor. The closest was red Box, which was on the rise, but they had a totally different approach to DVD rentals, and they were at least initially targeting a different demographic, so that wasn't as big of a concern at least initially. So Netflix was really able to kind of grow without having to worry about an opponent taking them down. Now, to start this episode, we're actually going to backtrack just a little bit. In that last episode, I got up to two thousand eight, but for this part to talk about the streaming side of Netflix's business, because the last time it was mostly about the DVD side, we have to go back a little bit to two thousand six because it was September two thousand six when Amazon launched a service it originally called Amazon Unboxed. That was the name of a digital video download service. You could purchase movies and TV shows off Amazon and then download them to a device to watch. I would later evolve into Amazon Instant Video, and then Amazon would eventually transition away from offering video downloads and then focus instead on delivering streaming videos, so you would be able to watch that content. It would remain in your library if you if you actually purchased it as opposed to rent in it, and you could watch it whenever you wanted, as long as you were logged into your Amazon account. But the video would quote unquote live on Amazon servers, you wouldn't download it to your machine. Early on, this was not a direct competitor to Netflix's streaming video service, because again, this was more of a download a purchase process, and Netflix had already gotten out of that market in two thousand five. However, it would become a major competitor later on, and then on March twenty, two thousand seven, another competitor rose up. That's when NBC Universal and News Corps held a joint announcement for a new online service that they were going to call Hulu. The service would not go into beta testing until the fall of two thousand seven, so this was a preliminary announcement, and the official debut of the website to the general public happened almost a year later, actually, and in March of two thousand eight. This was a big deal for Netflix and it's streaming strategy. It was a real alternative to what Netflix was doing now. For one thing, the reason why this was a big deal and a potential threat is that Netflix is an independent company. It is not part of a larger conglomerate that owns content studios. Hulu, however, represented a joint venture between lots of different partners, including NBC Universal, which includes both NBC the broadcast company and Universal Studios, and also news Core, which includes the company's Fox Broadcasting and twentieth century Fox. Hulu would have a huge advantage in that the companies that were making the content we're also responsible for bringing to life this delivery system. So it was not a big stretch to guess that those companies would favor sending their content to Hulu rather than to Netflix, and that they would leverage this to make an advantage and take away some of Netflix's power. Well. Complicating matters was that Disney Studios, through its subsidiary ABC, would announce that it was going to take a steak in ownership of Hulu in two thousand nine, and while News Corporation would transfer its steak to twenty first Century Fox, the fact Disney then moved to acquire twenty first century meant that the major players were pretty much the same um. Some of the ownership was switching, but it wasn't like a lot of new players were coming in. Also, Comcast would announce an intention to acquire a majority stake in NBC Universal in December two thousand nine, which might have seemed like all these big major players in creating movies and television, we're starting to align against Netflix and Netflix's plan for streaming content. Other partners in the venture, at least initially, would include a O. L. Facebook, my Space, which was still a thing back in two thousand seven, and Yahoo, which you could argue was also still a thing in two thousand seven. Fun side fact, hulu dot com had actually existed since as a website, but it wasn't associated with streaming video, so what was going on. Originally, hulu dot com belonged to a woman named Amy Hung, who used it as a personal blog site. NBC would purchase this site sometime in two thousand seven, and it was Hung who had said that the name Hulu was her reference to a Chinese word for gourd, and that people in China would hollow out these kinds of gourds in order to store precious things inside them, so it was a container for precious things. When the Hulu dot com streaming site launched and allowed people to sign up in October two thousand seven, it included that definition. It was actually an expanded version of the definition, and it raids verbatim. Here we go. Quote in Mandarin Hulu has two interesting meanings, each highly relevant to our mission. The primary meaning interested us because it is used in an ancient Chinese proverb that describes the Hulu as the holder of precious things. It literally translates to gourd, and in ancient times the Hulu was hollowed out and used to hold precious things. The secondary meaning is interactive recording. We saw both definitions as appropriate bookends and highly relevant to the mission of Hulu. End quote. When Hulu launched, it worked in a fundamentally different way from Netflix. So Netflix would offer a digital distribution through a subscription service, and originally it was an add on to DVD rentals. It didn't exist as its own individual offering for at least not at first. Hulu did not offer up a subscription service. Initially, on Netflix, you could watch films and TV shows commercial free. On Hulu. The videos were ads supported so you would get one or two commercials either before, sometimes inserted into the middle of the content you were watching. Netflix would offer up entire seasons of shows for whatever available titles it had, although they tended to be older shows, or they were older seasons of shows, not the most recent ones. Sometimes it might be not be the most recent two or three seasons. Hulu offered up several recent episodes of currently airing shows, so usually it was five. You get the five most recent episodes, and then sporadically you might get access to earlier seasons of those shows. Uh As new shows would debut, new episodes would debut on television about a few days maybe a week later, they would find their way to Hulu and they would knock off the oldest of the most recent five episodes off the list. So once you got the episode six of a new show like It's just airing that year, then when episode six would move over to Hulu, it would knock off episode one, and then you would just have episodes two through six to view. So if you did not keep up with it, you would eventually lose the ability to watch those earlier episodes until maybe much later, when an entire completed season would join Hulu. So Hulu would later introduce a subscription service which was also ad supported, which got a lot of people upset. They thought, if I'm paying a subscription, why am I also forced to watch commercials? But that would increase the number of pieces of content viewers could access. The more recent episodes wouldn't drop off necessarily. You might be able to stick with a show all the way through a season and be able to watch those earlier episodes and later. Still, it would eliminate that free service entirely, and the only way to view Hulu content would be to become a subscriber. Now, all that is to say that Netflix is future, and digital delivery was not certain. The DVD rental business would eventually decline as the format itself would fall out of favor, with more customers shifting to digital alternatives. That writing was on the wall. Everyone could tell that sooner or later, this physical medium is going to reach a level where is no longer profitable to operate this rental business. There will still be devotees of the medium. There's still gonna be people who prefer DVDs and blue rays to streaming media. That makes sense, But there may not be enough of them to support a business. The debut of the Blu Ray and the HD DVD formats in the mid two thousand's shifted things a bit. It extended the life of physical media. Netflix actually would carry both Blu Ray and HD DVD until Netflix, like everybody else, realized that Blu ray was going to win out over h D DVD. The company would dump the h D DVD format in early two thousand eight, as did everybody else. So where did the company go from there? Well, first, it started a transition to the cloud. In two thousand and eight, Netflix's servers encountered a massive database corruption problem, and that messed up Netflix's ability to track and send out DVDs to customers. Operations had to be suspended for three days while Netflix engineers frantically tried to fix the problem. That whole mess decided or lad Netflix's executives to decide that the best thing to do is to shift away from operating their own data centers and instead moved to a really reliable cloud based service, and the one they picked was run by Amazon Amazon Web Services. That process of transitioning from their own data centers to Amazon Web Service would take several years to complete. It's starting in two thousand eight, it really didn't finish until about so this was not a quick process. It takes a while to migrate systems and do so away where you don't interrupt services. Netflix also signed content licensing deals with various studios, sometimes at a bargain price. Many executives were skeptical that online video would be able to survive, which might have contributed to some negotiations and Netflix's favor So Netflix landed a distribution deal with the premium channel Stars, for example, to carry a lot of the movie titles that Stars had the rights to, and the agreement was for twenty million dollars for two years, which is a lot of money, but it's actually not unreasonable for one of these licensing deals, especially if you compare it to something like the eight hundred million dollar deal Netflix signed with lions Gate MGM and Paramount for a five year licensing agreement. That deal prompted everyone from directors to actors to producers to also get involved in this process because they had a direct interest in this. They wanted to know, how are we going to get compensated for our work being displayed over this new medium. What what are the rules here? Because if I get residuals, how is that determined through this online service? It was a chaotic, messy time. Another thing that could have worked and may have worked in Netflix's favor, is that at that time, the big studios were looking at it as if it were a small cable distributor rather than a nationwide entity. They weren't. They're kind of underestimating Netflix in other words, But that changed as the subscriber base for Netflix would grow each year and by Netflix nearly had nearly as many subscribers as the cable company Comcast did, and by then Netflix had landed several multi year licensing agreements, and at that point the studio said, oh, we may have contributed to the growth of a real giant. And now they have clout, they have subscribers, and if we end up not coming to terms with them, and then the company turns to their customers and says says, we would love to bring you X movie, but because the studio refuses to license their work to us, you aren't going to get it. Then people might turn against that studio. And by this time, by the time they made the realization, it was kind of too late. Well, I've got a lot more to say about Netflix, but first let's take a quick break to thank our sponsor. Now, around this time, there was also a culture shift that was starting to happen and one we still talk about today, and this was the growth of the cord cutters and the emergence of the cord never's. These are populations that represent people who ended their television service, their pay TV service, whether it was cable or satellite, or they never bothered to sign up for one in the first place. Some of them would still watch television programming, but they did it through things like over the air antennas, so they're not paying for the content, They're just getting whatever is being broadcast over the air, or they were getting it through digital streaming on a computer or enabled set top box, so they were getting it delivered through the Internet, but not through the traditional satellite or cable systems. The growth in cable subscribers began to slack off, and occasionally they would actually decline in the number of subscribers, not just slow growth, but see reverse growth. They'd see people leaving these subscription services. The trend seemed to validate the Netflix corporate strategy Another battle Netflix had to wage was directly related to the popularity of the company's streaming service. As more customers began to use Netflix to not only rent DVDs but also stream movies online, the percentage of traffic on the Internet related to Netflix grew. Netflix was the source for sixty percent of all the streaming movies online. All the other services combined would make up the other four and according to several analysts, Netflix traffic accounted for twenty of all broadband traffic in the United States. Now, this was something companies like Comcast didn't care for very much. For the most part, companies that owned infrastructure on the Internet, as in like the actual series of tubes, if you prefer, they had an understanding the They would have these agreements in place, and the agreement said, all right, I will carry data that's coming from your side of the Internet, if you in turn carry data that's coming from my side of the Internet, and as long as it matches up with the amounts that we have agreed to, no one charges anyone any fees. And if it goes beyond that, then we start talking about metering that data because I'm going to be carrying more of your stuff. Then you're carrying a mine. I need to be compensated for that. So this is called peering agreements. It's a foundational part of the Internet, and it's also one of the basic concepts of net neutrality. This idea that these peering agreements are what allow massive amounts of data to pass across the Internet without getting throttled or having surcharges put on top of them. And in two thousand ten that concept was put to the test and continues to be to this day. The major players in this matter at the time were Netflix, Comcast, and a company called Level three Communications. Now Netflix, I know you guys know because I've been talking about them for three episodes before this, and if you have not listened to those, it's odd that you would listen to a part four. First go back and listen to parts one through three. Comcast is a cable company and internet service provider in the United States. But you may not know what Level three Communications is. A lot of you probably do know because you're really tech savvy, but some of you might not. You might be like me, and it might be one of those things that you understood later. Well. Level three Communications is one of the companies that owns and operates the infrastructure that we call the backbone of the Internet. They own parts of the Internet connections that other traffic will travel across as it goes from one network to a network. Because remember the Internet is a network of networks, so comcasts network which connects customers to the rest of the Internet. This backbone we're talking about will send traffic across the backbone and receives traffic coming from the backbone and then sends that onto its customers. One way content companies are able to deliver content to users, no matter where those users might be within the service area is to build out what is called a content delivery network. This is a system of servers that a company distributes in various regions, and when customers access the online service, they connect to the server best suited to give them the fastest response. So, if you've played online video games, you're probably familiar with logging into a specific server. Those servers are typically organized via region, and generally speaking, if you log into a server that's closest to you to wherever you happen to be geographically, you tend to have things like the fastest response time, less lag, things that are really important. If you're playing a game, those same things are really important. If you want to watch high quality streaming video, you want there to be as little delay as possible. Customers hate it when they have to sit there and watch a buffering logo show up and they wait to see their video content. That that's not a good experience. So Netflix would do this. They would use these content delivery networks in order to make sure that customers would get a good experience when viewing films and TV shows online. Before Netflix reached an agreement with Level three Communications to have Level three take on this task for them, a different CDN company called a com I did that job a k A m AI. So in this agreement, Comcast would actually charge a COMMA to deliver traffic to Comcast network, and a com I did not own Internet infrastructure. It was able to set up these content delivery networks, but it was not appear in the traditional sense of the peering agreements. So that's why Comcast could charge a coma I for this. It wasn't like it was this mutual relationship where Comcast would send data across servers belonging to a COMMA and vice versa. It was a one way relationship, which meant that Comcast was metering it it was charging a comma I. Well, then Netflix, which is over to Level three Communications, they take over Netflix's delivery, and things changed because Level three is a peer and had an existing peering agreement in place with Comcast. Now, the agreement would actually allow Level three to send twice as much data to Comcast as Comcast could send to Level three, So it's a two to one relationship. So if Comcast can send one units, then Level three could send two hundred units back and it was considered to be even in the eyes of the agreement. That means that twice as much traffic end up being equal traffic. But Comcast argued that this Netflix deal would mean that Level three would start sending five times as much traffic to Comcast and that would exceed this period agreement. So Comcast also wanted to charge Level three the same way it had been charging a comma I for sending this Netflix content to comcasts network, because otherwise it was going to get cut out of that revenue that was part of the you know, Comcast revenue plan. Level three argued that Comcast was trying to wriggle out of net neutrality, and Comcast argued that Level three was inappropriately claiming that this was a net neutrality issue when in reality it was appearing issue. And I'm not a big support of Comcast, but i do feel like the company had a bit of a leg to stand on in this particular argument. If the peering agreement was for a certain amount of traffic and Level three was going to exceed that, then by my estimation, Level three should have been expected to pay a meter rate, and it didn't matter where the data came from. It wasn't that specifically came from Netflix. It was that the amount of data was exceeding the agreement. Whether that came from Netflix or from a spreadsheet doesn't really matter. But that would also mean Level three would likely have to pass those expenses onto Netflix, which would then of course pass those expenses on to customers, and that would have been a pretty negative experience all around. The fight would stretch for years with worries that Comcast would end up throttling Netflix traffic, not because it was Netflix necessarily, though that service did compete with comcasts own Internet video delivery services that it provided to its customers, but rather because as level three would be in violation of that agreement. Netflix ended up extricating itself out of this problem in and that's when it was announced that it was going to pay Comcast for a direct connection from Netflix servers to Comcasts network, So they were no longer employing anyone else to become a content delivery network. They were essentially doing it themselves and paying Comcast for the privilege. But the bigger dispute reached something of a resolution in two thousand fifteen, just a short time before the FCC was to start hearing complaints under some new net neutrality rules, rules which I should add have since been overturned by the most recent FCC leadership, So the mess keeps on going. Meanwhile, on the executive side over at Netflix, read Hastings was apparently becoming less approachable. According to the book Netflix, which I have cited several times in these episodes, it was getting harder to change hastings mind about things. He would make up his mind on something, and challenging his ideas was becoming more and more difficult to do. Some of his top executives would leave around this time. They saw a very little opportunity to grow at Netflix. They saw a little indication that they would have a shot at leading the company themselves, and figured that they pretty much achieved their goals that they set out to do when they joined Netflix. Things like fighting off Blockbuster or launching a digital videos uh you know service. Those things had happened already, so rather than just sit around, they decided to leave and take on new challenges or even retire. On November twenty ten, Netflix really showed off how it believed the streaming service was going to be the future, because for the first time, they would offer customers the option to subscribe to just the streaming part of Netflix's service without the requirement of having a DVD rental service on top of it. Because up to that point it was an add on. There was no just streaming option for the subscription, but in suddenly there was. This new service would cost seven dollars nine cents per month when it launched, and the combined plan of unlimited DVDs and streaming went from eight dollars and nine nine cents a month to nine dollars a month at that point. Hastings even said that the press release that Netflix was now quote primarily a streaming video company delivering a wide selection of TV shows and films over the Internet end quote. Netflix finally began to expand its streaming services internationally. First they began to offer service in Canada and then later in Latin America and the Caribbean in late two thousand eleven, and that was also when Netflix announced what would be the beginning of its next serious move and changing the landscape of entertainment. The company announced it would be the exclusive distributor in the United States of a television series called Lily Hammer, which originated out of Norway, and perhaps more import lee, they also announced that they were developing their own original program. Netflix was playing the part of a TV studio. They were actually producing a show, not just streaming a show, and the first original program was an adaptation of a TV series that had been on UK television in the nineteen nineties. That adaptation would change the time and place of the story, switching from the the days of the nineties over in the UK to modern day United States, and this series was called House of Cards. But while new original content from Netflix was exciting, that wasn't the two thousand eleven story that got customers talking and shouting and leaving nasty comments and canceling their subscriptions. Nope, that honor would go to a little scandal or kerfuffle. I guess is a better word called quick ster. I'll explain after we take a quick rake to thank our sponsors. So quick stir well, here's the down in dirty details. Netflix's business was in two really big categories, and one was the DVD rental business that was getting more expensive to operate. Postage fees had gone up, blue rays were more expensive than DVDs, and so it was getting harder to make that a cost efficient, profitable business. Meanwhile, there was the streaming services side of the business, and that was clearly the future for Netflix. That was where things were going to ultimately end up. But the DVD format and blue rays hadn't died. There were still a lot of people who preferred the experience of watching movies on that physical media. And there were titles in Netflix's DVD library that you could not find in the streaming library due to licensing issues. So Netflix could go out and buy copies of a movie and then offer them up for rent, but they couldn't take necessarily those exact same titles and put them up for streaming because it went it was the difference between renting a physical format and broadcasting content. Because of that, you would always find a much more broad and deep selection of television shows and films in the DVD side than you would in the streaming side. So it didn't seem feasible to just kill the DVD side of the business entirely, but it was getting more challenging to operate both sides of the business simultaneously. Netflix had also raised the prices of its joint DVD and streaming plans to sixteen dollars a month at that point, and that was a heck of a jump, and this was in a recession. The decision would affect half of Netflix's subscribers in the United States who are under this joint plan, so about of all Netflix customers had both DVD and streaming subscriptions tied together, But people who subscribed only to DVDs or only subscribe to the streaming service, they would have actually seen a price cut in this approach. However, the focus of this announcement was almost exclusively on the price jump for the people who had a joint account like the joint DVD and streaming services and Because of that, Netflix was getting a lot of bad press and customer complaints. So there was a new idea, one that a lot of people inside Netflix did not like, but read Hastings was very gung ho on going forward with this idea, and that idea was to split the two businesses apart and make the DVD side of Netflix its own company and calling it quick Ster. It would have its own internal corporate structure, it would have its own CEO, it would be free from the streaming business of Netflix. But that also meant it would be a huge change to customers. It meant that the combined plan of DVDs and streaming would become more complicated. Each company would have to maintain its own cues and customer profiles. So if you wanted to have that that joint service of DVDs and streaming video, now you were going to have to have two accounts. You're gonna have a Netflix account and a quick Stot account. You have two subscriptions to payments, two different cueues. Uh. If you were let's say that you had a queue in your streaming service and you had a queue in the DVD service, and it turns out one of the movies that's on your DVD list becomes available on streaming, and you watch it and streaming, and then your next DVD shows up and it happens to be the same movie. That would be a really frustrating experience, especially since it had originally both come from the same company. People were not happy. Netflix also was not very good at communicating why it was doing this in the first place, and the main reason was to allow the DVD side to focus on delivering rentals with a deep library and do it efficiently and with a profit in mind, while the streaming side could dedicate more resources like time, energy, and effort to building out its library and making new content. Most coverage at the time criticized how Hastings communicated these changes. He actually did it by shooting a short video that the company had produced independently. UH. Against the wishes of a lot of the folks in his executive team, he did this, and it became another notch in the argument that read Hastings was just not very good at communicating with his customers or understanding where his customers were coming from. He would eventually reverse this decision, and he would bring the DVD business back under Netflix and UH and just abandoned the idea of Quixter, and that took about a month. They had not yet really spun out Quixter. They had announced the intention to do this, but they ultimately decided that that wasn't going to work after they got a massive negative reaction from customers and a lot of people lost their jobs in the process because in the preparations for making this move, there were people who were brought on or transitioned over to new roles. They were going to fill new positions under Quickster, but now Quixter was gone, those positions were gone, and so people found themselves out of a job they had they had switched over, and they didn't have a job to go back to over at Netflix. So it was a really big misstep for Netflix and for Hastings, but the company was able to recover. It expanded in two thousand twelve by launching services in Europe, and in April two thousand twelve, Hastings and Netflix would fund a political action committee or pack called flix Pack, and this is a lobbying group. It contributes money to the campaigns of politicians who would support legislation that was in favor of net neutrality. For example, or that they would vote against any legislation that would pose a threat to Netflix's business. So Netflix became a real political entity at this point. On December two thousand twelve, Netflix went dark in North America, and not on purpose, so this is Christmas Eve, two thousand twelve. The streaming service went offline for several hours and the root of the problem was with the elastic load balancer service on Amazon's cloud platform, so there was really nothing Netflix could do at this point. There was an error on the Amazon cloud service, and this was when Netflix was still in the process of transitioning over to Amazon's platform. In August, Netflix introduced a concept it had previously implemented in its DVD rental business, which was profiles. With profiles, a household could have multiple cues to represent the preferences of each member of the family, so Dad could have one queue of content, Mom could have another, you know, etcetera, etcetera. One two fifteen, the company announced an incredible seven to one stock split that meant that for every share of stock in Netflix you owned, you would get six additional shares. The share price would reduce down to one seventh of their former value. And I talked about this in an earlier episode, but really quickly. This approach increases the number of shares, but it decreases the price per share that maintains the same company value throughout the process. But it's also a way to encourage small investors to get on board because the price for an individual share of stock is lower than it was before. Netflix also would launch streaming services in Japan, and in ten at CS Netflix announced it would enter one thirty new markets across the world, so it was really growing quickly last year that being seen. At the time of this recording, the research firm p WC sent out a survey to learn more about how people were getting their entertainment, and according to their survey results, seventy three percent of responded said that they were pay TV customers, so cable or satellite or something like that responded said they subscribed to Netflix. So the same number of people not necessarily exactly the same people, but the same number of people were now Netflix customers as they were for any sort of pay TV customers. So this survey suggests that the US means that streaming is really the direction that we're moving in. If we've gotten to a point where there's an equal number of people subscribed to Netflix as there are for any given pay TV service, or all of them collected together. That's pretty big news. Meanwhile, there are these other competing services out there. You've got Hulu, Amazon Video, You've got the upcoming Disney streaming service. Those are all muddying the waters and making things more complicated. No service can boast having all of another services offerings plus more. So in other words, you're not going to go to Hulu and see, oh, you have everything Netflix has plus this other stuff. Where you go to Netflix and say, oh, you've got everything, Amazon Video has plus this other stuff. No one has everything. So it's quite possible that if you want to see certain programming, you're going to have to subscribe to multiple services that you know, you might say, oh, I really want that show and I really want this other show, and unfortunately they're both exclusive to different services. Well, you have a little option but to subscribe to both of those services. And this is getting pretty messy as we're seeing more of these services pop up. It requires more decisions on the part of the customer, and a lot of people aren't really thrilled about the idea of having to sign up to multiple services, so that is becoming a bit of a complication. And then you also have premium channels like HBO having their own competing services. So while there may be a desire to cut the chord, the alternative seems to be that you're gonna have to subscribe to two or more services to get what you want, unless you just happen to except that the limited options of any one service are exactly what you need. Netflix is also really big on original programming. There's no surprise there. They don't have to pay licensing fees and it gives them an advantage over competing services. So according to indie Wire, which cited an unnamed source, Netflix is releasing around eighty two original movies in ten and seven hundred new or exclusively licensed programs. The content budget for Netflix is an estimated thirteen billion dollars in and some of that original programming gets both critical acclaim as well as an eager reception from Netflix customers. In seventeen, the company garnered nine one Emmy nominations from its original programming, as well as eight Academy Award nominations for their original films and even one an Oscar for Best documentary feature with Icarus, so not everything on Netflix is fuller house, thank goodness. And it looks like in the near future, Netflix is going to focus on sports docuseries as another area to expand in. So the company continues to pour money into original programming and to add more to its features. It grows in more regions, so it's it's opening up more streaming services across the world, and I expect it will continue to be a pretty major player in entertainment for at least the near future. When will we see DVD rentals go away? Who's to say? I think it's gonna be a while. Read Hastings actually joked that he would make sure he would personally deliver the very last DVD that they ever rent and that would probably be sometime in Whether or not that prediction remains accurate, that's we got to wait around see. But that wraps up the story of Netflix so far. Obviously, the company continues to exist, so I'll probably have to do more episodes either specifically about Netflix or related to it in the future. But I think we've talked about it enough with four episodes back to back, right, So we're gonna come back in our next episode about a totally different topic, and I look forward to chatting with you guys. Then, if you have any suggestions for future episodes, maybe it's a company or a technology or a person in tech. Maybe there's someone I should interview, send me a message, let me know. 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