Netflix didn’t just become a global giant by accident. Its success came from a series of smart business decisions and a strong understanding of how people consume entertainment.

So how did they accomplish this?

A Simple Idea That Solved a Real Problem

Netflix began in the late 1990s as a DVD-by-mail service. At the time, renting movies meant paying late fees, having a limited selection, and visiting a physical store. Netflix removed these struggles by introducing new features into their business model. They began by delivering DVDs to your door while charging no late fees for a flat monthly price. This early subscription model trained customers to think differently. Instead of paying per movie, they paid for access. This mindset that they created on people, became the foundation for everything that Netflix did next.
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The shift to streaming that changed everything

In 2007, Netflix introduced online streaming. Customers would pay a fixed monthly fee and could watch as much as they wanted. At the time, this was considered a risky move. Still, it turned out to be the most important decision in the company’s history.

Streaming benefited Netflix by removing fixed distribution costs. It allowed them to scale globally much faster. It also provided instant satisfaction to its users.

Because of the rapid improvement of internet speeds, streaming became the default way for people to watch content. Netflix wasn’t just adjusting to a trend. They were early enough to lead it.
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One Monthly fee, endless content

Netflix incorporated a simple pricing model intentionally. Users would have to pay a fixed monthly fee, but could watch as much as they wanted. Netflix’s approach reduced the frustration. Users didn’t have to think before watching something. This created a habit. Before long, Netflix became a part of people’s daily lives. They paid for a monthly subscription. They felt like they were receiving more value.
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Personalization That Keeps people invested

Netflix has a business model that doesn’t just provide content; it actively helps users find something that they will enjoy. Behind the scenes, Netflix tracks viewing behavior. This includes what people watch, how long they watch it, and when they stop watching. The data makes the algorithm personal towards each user, improving each recommendation. These unique recommendations result in users spending more time on the platform. As a result, they stay subscribed longer. In a subscription business, retention matters just as much as growth.

Netflix originals

For years, Netflix depended entirely on licensed movies and shows. But as streaming competitors grew, they needed to think of something that would make them special that others couldn’t copy. That’s when Netflix began investing heavily into original shows. They would pay producers to create a show that only Netflix had the rights to. This would differentiate them from competitors and give users a reason to subscribe and reduce dependence on other studios. Shows like Stranger Things were strategic investments made to drive long-term subscriptions.
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Pricing Flexibility for a Diverse Market

As the market for streaming services became larger, Netflix adjusted it’s pricing by releasing multiple tiers based on video quality, ads, and more. These tiers allowed users on a budget to still enjoy the service while increasing profit from more premium customers. This new approach targeted nearly the whole market, allowing customers to choose what plan they wanted, thus increasing revenue.
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The Bottom Line

In conclusion, Netflix’s success didn’t come from one smart idea, but rather from combining solutions to real-world problems. They kept pricing simple for everyone, focused on user experience, used data to improve the app algorithm, and adapted quickly as the market changed

Why This Matter to Me

What also draws me towards Netflix’s business strategy is how closely it connects with my own interests. I have always been interested in how businesses scale their company to a global level and still manage to stay personal to individual users. Growing up over three continents, exposed to different cultures and diversity. I realized that a product can feel familiar everywhere while still incorporating the business’s main goal. Netflix does this well by recommending personal shows and suggestions, no matter where you are in the world. Observing decision-making in businesses like Netflix inspired me. I wanted to study companies more deeply and write about their actual functions behind the scenes.