Reed Hastings’ journey to founding Netflix, one of the most influential entertainment companies of the 21st century, began with an innocuous late fee. In the mid-1990s, Hastings rented a VHS copy of the film “Apollo 13,” a space docudrama directed by Ron Howard. The film, which was released in 1995, chronicled the real-life events of the third crewed mission by NASA to land on the moon, which faced life-threatening technical difficulties but managed to return safely to Earth due to the tenacity and ingenuity of both its astronauts and ground crew.
When Hastings failed to return the “Apollo 13” tape on time to his local video store, he was slapped with a late fee of $40. Frustrated and somewhat embarrassed by the experience, he began to contemplate a different business model for video rentals, one that would eliminate the need for due dates and late fees. This episode planted the seed of an idea that would later germinate into Netflix.
Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, Netflix initially started as a mail-order DVD rental service. The premise was simple: customers could rent as many DVDs as they wanted for a flat monthly fee, and DVDs would be mailed to them with a prepaid return envelope. The elimination of late fees was a unique selling point that set Netflix apart from brick-and-mortar rental stores.
This innovative approach to video rental caught on quickly. Over time, Netflix’s model evolved, and by 2007, they introduced streaming, allowing members to instantly watch movies and TV shows on their devices. This shift to streaming marked the beginning of a significant transformation in the way people consume media.
In hindsight, Reed Hastings’ experience with the “Apollo 13” late fee might seem trivial, but it was the catalyst for a revolutionary change in the entertainment industry. Netflix, inspired by that simple frustration, went on to challenge traditional broadcast and cable TV models, reshape content distribution, and usher in an era of binge-watching.