Netflix: Citizen Hastings, the Silicon Valley mogul
A few decades ago, Los Gatos, a small town south of San Francisco Bay, was a hippie stronghold. At the foot of the hills of Santa Cruz, people came to cut themselves off from the world, to immerse themselves in an alternative universe. A time that is definitely over. From now on, the town is chic and ultra-connected: with the turn of new technologies, at the end of the last century, the destiny of this wooded region has changed. Flower Power has faded, Silicon Valley has blossomed.
Today, Los Gatos is the bastion of the spoiled of the digital century. The demanding mantra of the municipality – “listen, learn, change, grow” (listen, learn, change, grow) – displayed on street lamps in the center. And this is where Reed Hastings built his empire, an empire that takes up much of Winchester Boulevard. On one side of Highway 85, which runs towards Cupertino, birthplace of Apple, terracotta-colored buildings, in the style of this old Hispanic region; on the other side, buildings of glass and metal, connected by overhead walkways. Opposite, on the other side of the boulevard, a small café, a massage room, another for yoga, and a branch of the Alliance Française. L’American way of lifebut happy California way.
An idea born of “Apollo 13”
This universe is that of Netflix, even if Reed Hastings was born in 1960 at the other end of the country, in Boston. The child was from the East Coast; the adult was born in the West. This is where he studied, at the prestigious Stanford University, about thirty kilometers from the headquarters of the king of streaming. The young man has not worked on cinema or audiovisual. He immersed himself in artificial intelligence. A profitable investment: at the age of 37, he had already made his fortune, selling the software company founded six years earlier for 750 million dollars.
As the 21st century approachese century so promising, Reed Hastings was already rich and still young. But to do what ? Returning to one’s first love – education? Before Stanford, he had joined the Peace Corps, the volunteer service created by John Fitzgerald Kennedy to help developing countries, and spent two years in Swaziland (now Eswatini) teaching maths.
Except that at Stanford he had acquired new tastes. Cinephilia? Always not. For him, the most important film in history – his own, anyway – is without a doubt Apollo 13, a good entertainment by Ron Howard devoted to the conquest of space. It will be his grail: it is from this video cassette that the idea of Netflix, season 1 was born. Reed Hastings had rented it from the video club in his neighborhood, but the film had quickly disappeared under a merry mess. When he reappeared later, the return date had passed, and he had been charged a $40 fee…
“Create a community”
Hence the idea of revolutionizing video rental to make it more flexible. Subscription ? Return by post? Amazon had just started with books. Why not the video? Too heavy, too expensive, too fragile with VHS. But a new technology was pointing its nose: the DVD. Prior to the release of this new medium, Reed Hastings put a CD in an envelope, which he sent to himself. Arrived in good condition, and for a very low price. Bank!
The debut of Netflix, in 1997, is therefore a DVD and an envelope. And the Internet, to put the catalog online. ” That’s not all, corrects Dade Hayes, journalist for the online magazine Deadline, devoted to the entertainment industry, and author of a book on the streaming wars published in April. Netflix, from the outset, had the idea of creating a community. Subscribers could comment on films on the Netflix site, share their tastes, exchange their feelings. This element will be central when the time comes for streaming. »
Netflix is therefore more than a DVD and an envelope. It is first of all a vision. This is what marked Joan Hamilton, freelance journalist, when she interviewed Reed Hastings in 2006 for the Stanford magazine, from which she is also a graduate. At the time, Netflix only had 3.6 million subscribers. “But Reed Hastings already saw very far”remembers the journalist: he was convinced that knowing the tastes of each subscriber would revolutionize the industry.
“Between every low-budget hit and blockbusters like titanic, there are hundreds of films and documentaries that might be quite to the liking of a limited number of people, but important enough nonetheless – if they ever knew they existed! », wrote Joan Hamilton, summarizing Reed Hastings’ vision. Basically, for the founder of Netflix, every film has its audience. On one condition: find it! Which, for modest budget films, is a miracle. “What we want is to democratize distribution, chained the visionary. If you can find 3 million people wanting to see it for each movie, that’s the jackpot. But to do that, you need a large scale. »
The subscription, “stroke of genius”
The future will prove him right. But, in 2007, when the great adventure of streaming began, nothing was certain. The Los Gatos firm, which invented nothing, is not alone on the starting line. “There was also Amazon and Hulu, set up by the major studios allied with the chains, recalls Dade Hayes. They all started at the same time, within a few months. But Netflix will quickly establish itself as the reference, in particular thanks to the community that the company had built with its DVDs. »
“The other stroke of genius is the subscription, says Gabriel Rossman, professor of sociology at UCLA (University of California, Los Angeles, editor’s note)where he studied cultural industries. I don’t know if it’s the Silicon Valley model, but it’s definitely the Wall Street one! In the cinema, it is the law of hit and flop. It is with great success that you can cushion failures. It’s because of Top Gun that Paramount is making its year. The subscription model is the reverse. Regular and known income: Wall Street loves it! »
In 2007, the Silicon Valley mogul is not yet reasoning like a producer. He is content to pay dearly for the broadcasting rights of other people’s products, and relies on his algorithms. While preparing, already, the next revolution…