Netflixed: The Epic Battle for America's Eyeballs

by Gina Keating

A few self-inflicted wounds that autumn added to a sense that they might be in over their heads in trying to ride an unproven technology into an unexplored world of online commerce. In September, Lowe and Randolph decided to burn DVD copies of President Clinton’s grand jury testimony in the Monica Lewinsky matter and sell them on Netflix. When the DVD duplication house got backed up with other orders, Lowe agreed to forgo DVD labels to speed up delivery of the already sold disks. Netflix took more than a thousand orders for the Clinton DVD—spurred by news stories about the offer in the Washington Post and New York Times. Randolph and Lowe counted the promotion a big success until a few days later, when they learned that, due to a mix-up at the dub house, a few hundred customers received DVDs containing hard-core Chinese pornography instead of the Clinton testimony. Another rookie mistake cost them more than a little embarrassment: Netflix had not assigned unique numbers for each DVD player coupon, to prevent fraud and duplication when setting up the fast-growing program, because the company’s databases could not handle a matrix so large.