Background
Netflix is an American provider of on-demand internet streaming media and flat rate DVD-by-mail that was established in 1997 in Scotts Valley, California by Marc Randolph and Reed Hastings. The concept of Netflix came to fruition when Hastings was strong armed into paying $40 in late fees after returning a movie well past its due date. Hastings’ initial investment of $ 2.5 million was to be used as start up cash for Netflix. The Netflix website was launched in April of 1998, employing a mere 30 employees and offering a limited selection of 925 movies available for rent via an online pay-per-rental model costing $4 per rental plus $2 shipping and late fees applied. In September of 1999 the month subscription concept was introduced, thereby eliminating the pay-per-rental model in early 2000. Netflix built a reputation on their business model of flat-free unlimited rentals without due dates, late fees, shipping and handling or per title rental fees. Netflix had their initial public offering (IPO) on May 29, 2002 selling over 5 million shares of stock at $15 a share and in June of the same year Netflix sold an additional 825,000 shares of stock at the same price. By 2005 Netflix had grown substantially, they were now offering over 35,000 title films and they were shipping a million DVD’s a day. In 2007 after delivering its billionth DVD Netflix began moving away from the business model of mailing DVDs and introduced video-on-demand via the internet. In September of 2011 Netflix announced that they would be re-structuring its DVD home media rental service leading to the loss of nearly a million subscribers. Things began picking back up for Netflix shortly after the initial announcement and by January 2012 they had gained over 610,000 subscribers. In early 2013 Netflix announced that they would be hosting their own awards ceremony, the Flixies, and