Netflix Will Its Operations Model be a Short Subject Or a Long-run Feature?

Reed Hastings often told the story of his inspiration for Netflix: a $40 late fee from Blockbuster. He said, 'It was all my fault. I didn't want to tell my wife about it. And I said to myself, 'I'm going to compromise the integrity of my marriage over a late fee?' Still chagrinned over the late fee, Hastings, a dot-com multimillionaire, formed Netflix, a company that would rent DVDs through the mail for a monthly subscription price, with no postage charges or late fees. Hastings's model for Netflix seemed simple enough. Netflix subscribers would create a wish list of DVDs on the company's website, and Netflix would send a new title from the list when the previous rental was returned. This case study examines this topic.