Netflix To Sell Out?

In the financial world, rumors have begun to swirl about a partnership between Netflix and one of the big daddies, Google, Apple, Microsoft or Amazon.  And why wouldn’t they want to scoop up Netflix?  One of the few companies who has not only made it through the recession, but also prospered, Netflix is a little gem.  There are approximately 309 million people in the USA and over 12 million of them belong to Netflix.

Netflix was started by a software entrepreneur named Reed Hastings who, after forgetting to return Apollo 13 to Blockbuster, got hit with a $40 late fee.  Like many of us, he couldn’t believe he was going to have to pay $40 for a simple mistake and started thinking that there had to be a better method out there for renting movies.  Cut to a friend telling him about DVD’s (it was mostly VHS at the time), a walk to the gym, and bingo, the idea arose that movie rentals could operate like gym memberships and he could do it by mail so nobody would have to deal with those nasty late fees.  Netflix now has 40 warehouses spread out across the country and each warehouse houses about 26 million DVDs.

Hastings’ first start up, Pure Software was bought out for 750 million dollars, which is what gave him the cash to realize Netflix.  Since Netflix earns almost a billion dollars a year, I’d say Mr. Hastings isn’t doing too shabby.  The only downside to Netflix is the US Postal Service’s announcement on March 29th that they’d like to cut mail delivery on Saturdays…but that’s a whole other blog.  In the meantime, I suggest you watch the stock market because Netflix is a hot ticket item, mark my words.

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