Netflix was originally intended as a streaming company. The DVD rentals were a strategy to solve some non-technical problems with the business while the infrastructure for streaming caught up.
That's fascinating and an incredible example of long term planning. Do you have a source for this?
edit: A very cursory check of the Wikipedia page and https://www.vox.com/2017/9/13/16288364/streampunks-book-exce... suggest that it probably isn't true that Netflix was "originally intended as a streaming company" considering at it's founding online streaming was still far from feasible, but I'm open to evidence to the contrary.
My source is that I worked at Netflix in the early days, it was always part of the strategy. We were discussing streaming internally almost a decade before they actually delivered it.
While streaming technology was early and teetering on the edge of viability, the real challenge was maneuvering the studios to license content that they didn't want to license because they wanted to retain absolute control. They were very averse to streaming for multiple reasons. The gambit of using DVDs in a series of Hobson's choices for the studios almost worked but ultimately failed at the late stages for an important reason that was difficult to bridge.
From Netflix's IPO prospectus, dated May 22, 2002:
> We currently provide titles to our subscribers on DVD only. However, we continue to monitor additional delivery technologies and, when appropriate, believe that we are well-positioned to offer digital distribution and additional delivery options to our subscribers.
And further down, a bullet point in their growth strategy section:
> Implementing Digital Delivery. We continuously monitor the development of additional digital distribution technologies. Historically, new technologies, including the VCR and more recently the DVD player, have led to the creation of additional distribution channels for filmed entertainment. We intend to utilize our strong relationships with the studios to obtain rights to acquire and deliver filmed entertainment through emerging digital distribution platforms as they become economically, commercially and technologically viable for those subscribers who prefer digital distribution.
And later, regarding competition:
> We believe that our strategy of developing a large and growing subscriber base and our ability to personalize our library to each subscriber by leveraging our extensive database of user preferences positions us favorably to provide digital distribution of filmed entertainment as that market develops.
Streaming on the internet was already exploding by 1997; relatively speaking, of course. I distinctly remember first watching South Park--myself and several other students, working in the computer lab technical assistance office for work-study, huddled around a Mac. This likely would have been circa 1998-1999, if not late 1997 when it debuted. (In fact, I don't think I ever watched South Park on cable television until many years later, while staying at hotels.) Around that time I also remember a major, well-funded streaming website that was supposed to revolutionize Indie film distribution. Anybody working in computing or the film industry knew where distribution was heading--the only question was when all the pieces would come together to make it viable, broadband adoption being the most important. (Not sure if a majority of American households were yet "online", but if not that was already a rapidly approaching inevitability.) There were many ventures which dove in too early.
While I wasn't paying attention to (or even knew much about) Netflix before it's IPO, certainly by then it was well recognized--and recognized as brilliant--that Netflix's strategy was to build relationships with studios and rights holders on the one hand, and customers on the other, precisely to position themselves to dominate digital distribution when the time came. Online DVD rentals was the ramp, permitting them to build momentum so they'd have a head start ahead of anybody else in the digital distribution space. And it worked spectacularly; it took nearly a decade, if not more, for anybody to even come close to Netflix's lead. (Wikipedia says Netflix began streaming in 2007, same year as Hulu, but Netflix was still dominating until only a few years ago.)
are you a young un? dont you guys remember real audio? i remember streaming the NBA playoffs over dialup all the way in Australia. Video streaming was already a thing, it just didn't have a killer library.
