A big question. Netflix is one of the largest companies in the world, both financially and in regards to being a household name that everyone knows instantly. A service with over 183 million subscribers worldwide, a figure only growing year on year, success is an understatement. However, who actually owns the company?
Netflix is owned by many different organizations and people since it is a public company. However, the majority shareholder is Reed Hastings, the company’s founder and CEO, who owns a 2.09% share.
To find out more about where Netflix came from, who owns the company today, and everything you need to know about what goes on behind the scenes at such a huge company, keep on scrolling!
Netflix Ownership: Explained
Let’s just straight into the breakdown.
Netflix is a massive shareholder-driven company, valued at $4 billion as of Q2 2020. This means that there isn’t really a ‘boss’ as such who owns the company and has complete responsibility, but rather a range of investors who ‘own’ the company. However, Reed Hastings is the CEO, so when it comes to actually running the company functionally, he’s the guy who makes it all happen.
More on him later.
When it comes to actual ownership, there are investors and shareholders from all over the world. The largest of these investors is Capital Research Global Investors (8.64%), an investment group based in Los Angeles. They are followed by The Vanguard Group Inc (7.59%) and then BlackRock Inc (6.18%).
Below these companies, there’s a group of 19 people consisting of directors and executive officers of the company itself who collectively own 15,163,363 Netflix shares, which equals around 3.40% of the total ownership.
Take these figures with a pinch of salt. They are the officially published figures for Q2 2020, but of course, they are changing all the time. You can find real-time figures here on the NASDAQ website.
The History of Netflix
For many of us, Netflix seemingly came out of nowhere. One day we were watching YouTube videos and buying or renting DVDs, and suddenly, all our favorite stores (sorry, Blockbuster) had disappeared, and we were binge-watching entire seasons at home while we Netflix and Chill.
It’s a phenomenon, but where did it all come from?
Perhaps surprisingly, Netflix was founded all the back in 1997 in Scotts Valley, California, by Marc Randolph and Reed Hastings. Marc worked for Reed’s company at the time, Pure Atria, which sold computers via mail order, which they then sold for $700 million in 1997. This was the biggest Silicon Valley sale in history at the time.
The internet era was started to boom at this point, and Randolph had been watching Amazon stock growing quickly. Inspired, they too wanted to ship products across the internet and were trying to find the right product to make it big. They were initially interested in VHS tapes, but they were too expensive and fragile to ship properly.
Eventually, in March 1997, they discovered DVDs and thought this was ideal, especially since the industry was already worth $16 billion. Netflix became the first online DVD rental store with 30 employees and trading around 925 titles on release.
While DVDs were initially pay-to-rent, meaning you paid for the one DVD you wanted to watch, the company switched to a monthly subscription format in September 1999. However, as of 200, even with 300,000 subscribers, the company was still losing money. Blockbuster offered to take them over for $50 million, but the owners declined.
From here, the company skyrocketed.
When the internet really started to take off, post-911, Netflix boomed. The company went public in 2002, selling around 5.5 million shares at $15 each. The first fiscal year passed, and Netflix could proudly publish their profits of $272 million in their first trading year.
As internet services became faster and more capable, the company transitioned to online streaming and started setting up offices around the world, offering their video format to everyone. By 2018, the company was the biggest online video subscription service in the world.
Wow. What a success story. It’s the classic tale of starting something new and facing a ton of obstacles and hardships, only to keep working and grinding to come out on top at the end of it all.
Just for a bit of fun, Netflix has an investment calculator on their website where you can ‘invest’ an amount back when Netflix was small and then see how much your stock would be worth today.
For example, if you invest just $500 in Netflix stock back in 2003, as of the 1st January 2021, it would be worth an incredible $326,291.33. That’s a profit of over 65,000%. Jeez.
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