Netflix

**Netflix, Inc.** (/ˈnɛtflɪks/) is an American media-services provider and production company headquartered in Los Gatos, California, founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California. The company's primary business is its subscription-based streaming service which offers online streaming of a library of films and television programs, including those produced in-house. As of April 2019, Netflix had over 148 million paid subscriptions worldwide, including 60 million in the United States, and over 154 million subscriptions total including free trials. It is available worldwide except in mainland China (due to local restrictions), Syria, North Korea, and Crimea (due to US sanctions). The company also has offices in the Netherlands, Brazil, India, Japan, and South Korea. Netflix is a member of the Motion Picture Association (MPA).

Netflix's initial business model included DVD sales and rental by mail, but Hastings abandoned the sales about a year after the company's founding to focus on the initial DVD rental business. Netflix expanded its business in 2010 with the introduction of streaming media while retaining the DVD and Blu-ray rental business. The company expanded internationally in 2010 with streaming available in Canada, followed by Latin America and the Caribbean. Netflix entered the content-production industry in 2012, debuting its first series *Lilyhammer*.

Since 2012, Netflix has taken more of an active role as producer and distributor for both film and television series, and to that end, it offers a variety of "Netflix Original" content through its online library. By January 2016, Netflix services operated in more than 190 countries. Netflix released an estimated 126 original series and films in 2016, more than any other network or cable channel. Their efforts to produce new content, secure the rights for additional content, and diversify through 190 countries have resulted in the company racking up billions in debt: $21.9 billion as of September 2017, up from $16.8 billion from the previous year. $6.5 billion of this is long-term debt, while the remaining is in long-term obligations. In October 2018, Netflix announced it would raise another $2 billion in debt to help fund new content.

## Content

Further information: List of original programs distributed by Netflix, List of original films distributed by Netflix, and List of original stand-up comedy specials distributed by Netflix

### **Original programming**

A "Netflix Original" is content that is produced, co-produced, or distributed by Netflix exclusively on their services. Netflix funds their original shows differently than other TV networks when they sign a project, providing the money upfront and immediately ordering two seasons of most series.

In March 2011, Netflix began acquiring original content for its library, beginning with the hour-long political drama *House of Cards*, which debuted in February 2013. The series was produced by David Fincher, and starred Kevin Spacey. In late 2011, Netflix picked up two eight-episode seasons of *Lilyhammer* and a fourth season of the ex-Fox sitcom *Arrested Development*. Netflix released the supernatural drama series *Hemlock Grove* in early 2013.

In February 2013, DreamWorks Animation and Netflix co-produced *Turbo Fast*, based on the movie *Turbo*, which premiered in July. Netflix has since become a major distributor of animated family and kid shows.

*Orange Is the New Black* debuted on the streaming service in July 2013. In a rare discussion of a Netflix show's ratings, Netflix executives have commented that the show is Netflix's most-watched original series. In February 2016, *Orange Is the New Black* was renewed for a fifth, sixth and seventh season. On June 9, 2017, season 5 was premiered and the sixth season premiered on July 27, 2018.

In November 2013, Netflix and Marvel Television announced a five-season deal to produce live-action Marvel superhero-focused series: Daredevil, Jessica Jones, Iron Fist and Luke Cage. The deal involves the release of four 13-episode seasons that culminate in a mini-series called *The Defenders*. *Daredevil* and *Jessica Jones* premiered in 2015. The *Luke Cage* series premiered on September 30, 2016, followed by *Iron Fist* on March 17, 2017, and *The Defenders* on August 18, 2017. In April 2016, the Netflix series in the Marvel Cinematic Universe were expanded further, to include a 13-episode series of *The Punisher*. In addition to the Marvel deal, Disney announced that the television series *Star Wars: The Clone Wars* would release its sixth and final season on Netflix, as well as all five prior and the feature film. The new *Star Wars* content was released on Netflix's streaming service on March 7, 2014.

In April 2014, Netflix signed *Arrested Development* creator Mitch Hurwitz and his production firm The Hurwitz Company to a multi-year deal to create original projects for the service. The period drama *Marco Polo* premiered on December 12, 2014. The animated sitcom *BoJack Horseman* premiered in August 2014, to mixed reviews on release but garnering wide critical acclaim for the following seasons.

The science fiction drama *Sense8* debuted in June 2015, which was written and produced by The Wachowskis and J. Michael Straczynski *Bloodline* and *Narcos* were two other drama series that Netflix released in 2015. On November 6, 2015, *Master of None* premiered, starring Aziz Ansari. Other comedy shows premiering in 2015 included *Unbreakable Kimmy Schmidt*, *Grace and Frankie*, *Wet Hot American Summer: First Day of Camp*, and *W/ Bob & David*.

Netflix continued to dramatically expand their original content in 2016. The science fiction horror *Stranger Things* premiered in July 2016, music-driven drama *The Get Down* in August, historical drama *The Crown* in November, and the year's premieres included comedy shows such as *Love*, *Flaked*, *Netflix Presents: The Characters*, *The Ranch*, and *Lady Dynamite*. Netflix released an estimated 126 original series or films in 2016, more than any other network or cable channel.

On September 14, 2016, Netflix and 20th Century Fox jointly acquired the U.S distribution rights to the Canadian independent drama film *Two Lovers and a Bear* following its screening at the Toronto International Film Festival on September 9, 2016.

Netflix has also invested in distributing exclusive stand-up comedy specials from such notable comedians as Dave Chappelle, Louis C.K., Chris Rock, Jim Gaffigan, Bill Burr and Jerry Seinfeld. In January 2017, Netflix announced all Seinfeld's *Comedians in Cars Getting Coffee* episodes and season 10 would be on their service.

The company has started internally self-producing its original content, such as *The Ranch* and *Chelsea*, through its Netflix Studios production house. Netflix expected to release 1,000 hours of original content in 2017.

In October 2017, Netflix iterated a goal of having half of its library consist of original content by 2019, announcing a plan to invest $8 billion on original content in 2018. There will be a particular focus on films and anime through this investment, with a plan to produce 80 original films and 30 anime series. In September 2017, Minister of Heritage Mélanie Joly also announced that Netflix had agreed to make a CDN$500 million (US$400 million) investment over the next five years in the production of content in Canada. The company denied that the deal was intended to result in a tax break. A study found that Netflix had realized this goal by December 2018,

In November 2017, Netflix announced that it would be making its first original Colombian series, to be executive produced by Ciro Guerra.

In May 2018, chief content officer Ted Sarandos stated that Netflix had increased its spending on original content, with 85% of its new content spending that year being devoted to it.

On December 31, 2018, a concert film of Taylor Swift's Reputation tour was released on Netflix.

In February 2019, Gwyneth Paltrow's lifestyle brand Goop signed a deal to produce a wellness-themed docuseries for Netflix.

### **Film and television deals**

Netflix currently has exclusive pay TV deals with several studios. The pay TV deals give Netflix exclusive streaming rights while adhering to the structures of traditional pay TV terms. Netflix's United States library includes newer releases from Relativity Media and its subsidiary Rogue Pictures, as well as DreamWorks Animation (until May 2018, when the studio signed a new contract with Hulu), Open Road Films (though this deal expired in 2017; Showtime has assumed pay television rights), Universal Animation (for animated films declined by HBO), FilmDistrict, The Weinstein Company (one of whose founders, Harvey Weinstein, has been accused of sexual harassment as of 2017 (see Harvey Weinstein sexual abuse allegations), causing Netflix to withdraw from hosting the 75th Golden Globe Awards with TWC, and ending its Golden Globes partnership with the mini-major film studio), Sony Pictures Animation, and the Walt Disney Studios (until 2019) catalog.

Other distributors who have licensed content to Netflix include Warner Bros., Universal Pictures, Sony Pictures Entertainment and The Walt Disney Studios (including 20th Century Fox). Netflix also holds current and back-catalog rights to television programs distributed by Walt Disney Television, DreamWorks Classics, Kino International, Warner Bros. Television and CBS Television Distribution, along with titles from other companies such as Hasbro Studios, Saban Brands, Funimation, and Viz Media. Formerly, the streaming service also held rights to select television programs distributed by NBCUniversal Television Distribution, Sony Pictures Television and 20th Century Fox Television. Netflix also previously held the rights to select titles from vintage re-distributor The Criterion Collection, but these titles were pulled from Netflix and added to Hulu's library. One of the more significant acquisitions was for the show Breaking Bad, produced by Sony Pictures Television. Netflix acquired the rights after the show's third season in 2010, at a point where original broadcaster AMC had expressed the possibility of cancelling the show. Sony pushed Netflix to release *Breaking Bad* in time for the fourth season, which as a result, greatly expanded the show's audience on AMC due to new viewers binging on the Netflix past episodes, and doubling the viewership by the time of the fifth season. *Breaking Bad* is considered the first such show to have this "Netflix effect".

Epix signed a five-year streaming deal with Netflix. For the initial two years of this agreement, first-run and back-catalog content from Epix was exclusive to Netflix. Epix films would come to Netflix 90 days after their premiere on Epix. However, the exclusivity clause ended on September 4, 2012, when Amazon signed a deal with Epix to distribute its titles via the Amazon Video streaming service. These include films from Paramount, Metro-Goldwyn-Mayer and Lionsgate.

On September 1, 2011, Starz ceased talks with Netflix to renew their streaming arrangement. As a result, Starz's library of films and series were removed from Netflix on February 28, 2012. Titles available on DVD were not affected and can still be acquired from Netflix via their DVD-by-mail service. However, select films broadcast on Starz continue to be available on Netflix under license from their respective television distributors.

Netflix also negotiated to distribute animated films from Universal that HBO declined to acquire, such as *The Lorax*, *ParaNorman*, and *Minions*.

On August 23, 2012, Netflix and The Weinstein Company signed a multi-year output deal for RADiUS-TWC films. Later that year, on December 4, Netflix and Disney announced an exclusive multi-year agreement for first-run United States subscription television rights to Walt Disney Studios' animated and live-action films, which were available on Netflix beginning in 2016. However, classics such as *Dumbo*, *Alice in Wonderland* and *Pocahontas* were instantly available upon completion of the deal. Direct-to-video releases were made available in 2013. The agreement with Disney is scheduled to end in 2019, as the company is preparing to launch a new streaming service that will carry all Walt Disney Pictures, Marvel Studios, and Lucasfilm releases. Netflix will retain rights to continue streaming the Marvel series that were produced for the service. With the Disney-Fox merger, movie and TV titles from 20th Century Fox will likely follow suit after their deal with Netflix expires, except *Two Lovers and a Bear*, which Netflix will likely retain U.S streaming rights to as Fox and Netflix jointly acquired the U.S distribution rights to the film.

Time Warner CEO Jeff Bewkes in 2011 welcomed Netflix's ability to monetize older content that was previously not generating money for media companies. On January 14, 2013, Netflix signed an agreement with Time Warner's Turner Broadcasting System and Warner Bros. Television to distribute Cartoon Network, Warner Bros. Animation, and Adult Swim content, as well as TNT's *Dallas*, beginning in March 2013. The rights to these programs, previously held by Amazon Video, were given to Netflix shortly after their deal with Viacom to stream Nickelodeon and Nick Jr. programs expired. However, Cartoon Network's ratings dropped by 10% in households that had Netflix, and so many of the shows from that channel and Adult Swim were removed in March 2015. However, most of these shows were added to Hulu in May of the same year.

In Canada, Netflix holds pay TV rights to films from Paramount, DreamWorks Animation and 20th Century Fox (shared with The Movie Network), distributing all new content from those studios eight months after initial release. In 2015, the company also bought the Canadian pay TV rights to Disney films.

In 2014, opinion blogger Felix Salmon wrote that Netflix couldn't "afford the content that its subscribers most want to watch". He cited as evidence the company's loss of rights to stream several major movies. According to journalist Megan McArdle, the loss of these movies was extremely problematic for the company; specifically, she said that "[Netflix's] movie library is no longer actually a good substitute for a good movie rental place".

Netflix also began to acquire distribution rights to third-party films in 2017 into 2018. One of its first acquisitions was the film *The Cloverfield Paradox*, which Netflix had acquired from Paramount Pictures in early 2018, and launched on its service on February 4, 2018, shortly after airing its first trailer during Super Bowl LII. While the film was critically panned, analysts believed that Netflix's purchase of the film helped to make the film instantly profitable for Paramount compared to a more traditional theatrical release, while Netflix benefited from the surprise reveal. Other films acquired by Netflix include international distribution for Paramount's *Annihilation*, worldwide distribution of Universal's *Extinction*, and Warner Bros.' *Mowgli: Legend of the Jungle*.

#### **Producers and distributors**

The following only applies to the United States. Listed companies may still or may not have licensing agreements with Netflix in other territories.

#### **Current**

* Aniplex of America
* BBC Earth
* CBS Corporation
* Cartoon Network
* DreamWorks Animation (TV series only)
* Lionsgate
* Funimation
* Hasbro Studios
* Kino International
* NBCUniversal
* Nickelodeon
* Paramount Television
* Paramount Pictures
* Sony Pictures
* Viz Media
* Warner Bros.

#### **Former**

* 20th Century Fox Television
* Metro-Goldwyn-Mayer
* Open Road Films
* Disney
* Relativity Media
* Turner Broadcasting System: Adult Swim, TBS, TNT
* The Weinstein Company
* Saban Brands

### Video games

In June 2018, Netflix announced a partnership with Telltale Games to port its adventure games to the service in a streaming video format. The games would be adapted to be similar to the existing interactive narrative stories that Netflix already offers, allowing simple controls through a television remote. The first such game, *Minecraft: Story Mode*, was expected to be released later in the year, and Telltale also received rights to produce a video game adaptation of *Stranger Things* for conventional gaming platforms. In September 2018, Telltale underwent a "majority studio closure" and laid off nearly its entire staff beyond a skeleton crew of 25 employees, citing a loss of funding. Netflix stated that while the *Minecraft: Story Mode* port would go on, the company was seeking alternate options for the *Stranger Things* project.