PORTFOLIO / PENGUIN
NETFLIXED
Gina Keating is a freelance business journalist. She previously covered media companies, law, and government as a staff writer for Reuters and United Press International for more than a decade. Her articles have been reprinted in newspapers around the world, and her freelance work has appeared in Variety , Colloquy , Du Jour , Southern Living , and Forbes . She lives in Texas. This is her first book.
PORTFOLIO / PENGUIN
Published by the Penguin Group
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First published in 2012 by Portfolio / Penguin, a member of Penguin Group (USA) Inc.
Copyright Gina Keating, 2012
All rights reserved
LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA
Keating, Gina.
Netflixed : the epic battle for Americas eyeballs / Gina Keating.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-101-60143-3
1. Netflix (Firm) 2. Video rental servicesUnited States. 3. Video recordings industry United States. 4. Internet videosUnited States. I. Title.
HD9697.V544N484 2012
384'.84dc23
2012027444
No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission. Please do not participate in or encourage piracy of copyrighted materials in violation of the authors rights. Purchase only authorized editions.
To the people of Netflix and Blockbuster for letting me into their story
and
To John A. Sopuch III and Margaret Romero for holding me up
CAST OF CHARACTERS
NETFLIX (ALPHABETICAL)
Lisa Battaglia-Reiss Human Resources manager
Jessie Becker Marketing, vice president
James Bennett Recommendation System, vice president
Corey Bridges Marketing, Customer Acquisition
Jim Cook Finance/Operations, director
Deborah Crawford Investor Relations, vice president
Chris Darner Product Management, director
Shernaz Daver Public relations consultant
Tom Dillon Chief operating officer
Boris Droutman Web Engineering, manager
Vita Droutman Senior Systems, architect
Jonathan Friedland Corporate Communications, vice president
Reed Hastings Cofounder/chairman and chief executive
Jay Hoag Board member/investor
Neil Hunt Chief technology officer
Leslie Kilgore Chief marketing officer
Paul Kirincich Financial Planning and Analysis, vice president
Christina Kish Merchandising, director
Kirby Kish Business Development, director
Stan Lanning Cinematch, developer
Mitch Lowe Business Development and Strategic
Alliances, vice president;
Redbox, president
Barry McCarthy Chief financial officer
Patty McCord Chief talent officer
Eric Meyer Chief information officer
Joel Mier Research and Analysis, director
Marc Randolph Cofounder/chief executive
Andy Rendich Chief service and operations officer
Ken Ross Corporate Communications, vice president
Ted Sarandos Chief content officer
Therese Te Smith Corporate Communications, director
Steve Swasey Corporate Communications, director
David Wells Chief financial officer
Erich ZieglerMarketing, director
BLOCKBUSTER (ALPHABETICAL)
John Antioco Chairman/chief executive
Bryan Bevin U.S. Store Operations, senior vice president
Edward Bleier Board member
Sam Bloom Business Development, vice president
Aaron Coleman Blockbuster Online, chief technology officer
Ben Cooper Blockbuster Online, director of marketing acquisition and business development
J. W. Craft Blockbuster Online, vice president of strategic planning
Rick Ellis Blockbuster Online, operations consultant
Shane Evangelist Blockbuster Online, senior vice president and general manager
Gary Fernandes Board member
Bill Fields Chairman/chief executive before Antioco
Sarah Gustafson Blockbuster Online, senior director, customer analytics
Jules Haimovitz Board member
Lillian Hessel Blockbuster Online, vice president, customer marketing
Jim Keyes Chairman/chief executive
Karen Raskopf Corporate Communications, senior
vice president,
Nick Shepherd Chief operating officer
Michael Siftar Blockbuster Online, director, applications development
Nigel Travis President
Strauss Zelnick Board member
Larry ZineChief financial officer
COSTARS (ALPHABETICAL)
Robert Bell AT&T Laboratory, Statistics Division, researcher
Jeff Bezos Amazon.com founder/chief executive
Martin Chabbert Netflix Prize winner, French-Canadian programmer
Tom Dooley Viacom, senior vice president
Roger Enrico PepsiCo, chairman
John Fleming Walmart, chief executive
Brett Icahn Carl Icahns son
Carl Icahn Blockbuster investor/board member
Michael Jahrer Netflix Prize winner, Big Chaos team, machine learning researcher
Mike Kaltschnee HackingNetflix, founder/blogger
Gregg Kaplan Redbox, chief executive
Mel Karmazin Viacom, chief operating officer
Yehuda Koren Netflix Prize winner, AT&T Laboratory, scientist
Warren Lieberfarb Warner Home Video, president
Joe Malugen Movie Gallery, chairman/chief executive
Dave Novak Yum! Brands, chairman/chief executive
Michael Pachter Wedbush Morgan, analyst
Martin Piotte Netflix Prize winner, French-Canadian programmer
Sumner Redstone Viacom, chairman
Stuart Skorman Reel.com, founder/chief executive
Andreas Toscher Netflix Prize winner, Big Chaos team,
machine learning researcher
Chris Volinsky Netflix Prize winner, AT&T Laboratory, Statistics Division, executive director
Mark Wattles Hollywood Video, founder/ chief executive
CONTENTS
PROLOGUE
IT IS EARLY MORNING ON a workday in the spring of 1997. A dusty maroon Volvo station wagon pulls into a commuter parking lot in Scotts Valley, California, in the foothills of the Santa Cruz Mountains.
The dot-com bubble is on the rise and the parking lot is lousy with twenty-something computer geeks, male and female, gathering in carpools to take them over the hill to Silicon Valley.
They carry canvas cases with logos: Apple Computer, Sun Microsystems, Oracle Corp., and other hot technology companies. Most wear the Valley uniform of board shorts or Levis with a wrinkled T-shirt, a fleece jacket, and some form of Teva footwear. Several have bed head from not showering and a dazed look from long-term lack of sleep.
The Volvo pulls toward a space on the deserted far side of the lot, where a shining steel blue Toyota Avalon is the lone occupant. The Toyota driver sits in the drivers seat, door wide open. At the sight of the Volvo, the Toyota driver jumps out of his car.
He is Reed Hastings, a tall lean man in his midthirties, wearing pressed Levis, a white T-shirt under a worn corduroy button-down shirt, brilliant-white running shoes, and black socks. He has close-cropped brown hair, a neat goatee, intense blue eyes, and a perpetually guarded expression. His normal posture, slightly forward and a bit hunched in the shoulders, reflects years of staring at computer monitors in pursuit of beautiful mathematical algorithms to define all manner of natural and man-made phenomena.
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