Working Backwards: Insights, Stories, and Secrets from Inside Amazon

by Colin Bryar

The two big, revolutionary breakthrough features of the Netflix service were subscription and streaming. Amazon and Apple were the leaders in premium movie and TV distribution, but we offered downloads only (and you had to purchase or rent each movie or show). We thought of streaming as a low-quality phenomenon—the domain of YouTube, with its videos of dancing cats that you watched on your PC for a couple of minutes between meetings. So when Netflix launched Watch Now, we took note and discussed the service in detail, but the prevailing wisdom inside our team and among others in the industry was that it was a half-baked test, not a serious offering. The other noteworthy feature of the Netflix streaming service was that it was free. Actually, as my mother used to say when trying to teach me good fiscal sense, “It isn’t free. It’s included.” It came at no extra cost with most of the Netflix DVD rental-by-mail subscription plans. In retrospect, it seems obvious that the Netflix launch was a significant threat, because streaming plus subscription would prove to be the magic combination in the digital video business.