Pay, Play, Profit: How Streaming Giant Netflix Earns Money
From late-night movie marathons to weekend series binges, Netflix has quickly become our go-to destination for a daily dose of entertainment, right? But how does the world’s biggest OTT platform turn our screen time into billions of dollars in revenue? Before we spill the beans for you, let us first go back in time to understand how and when Netflix was started.
When Was Netflix Founded?
Netflix, which has gone on to become the biggest OTT platform, with a market value of $500 billion, was started by Reed Hastings and Marc Randolph on August 29th, 1997, in California.
But not many of you might know that before becoming the streaming giant that it is today, Netflix was just a DVD-by-mail service provider. It was much later in 2007, the company launched a streaming media service. Eventually, in 2023, Netflix finally decided to draw curtains on its DVD-by-mail rental service, citing the continuous decline in the popularity of the DVD service as a concept in itself.
How Much Money Does Netflix Earn?
As per Netflix’s financial report for 2024, the streaming giant earned $39 billion, which roughly translates into more than INR 3 lakh crore (Rs 3,00,00,00,00,000)1. This is the eye-watering revenue earned by Netflix last year (2024), while the figures for 2023 and 2022 were not too far away at $33.7 billion and $31.6 billion, respectively.
Where Does Netflix's Revenue Come From?
It's a no-brainer that Netflix primarily earns its revenue from the streaming services it provides to its subscribers. Netflix offers a variety of streaming membership plans, the price of which varies by country and the features of the plan.
As of December 31, 2024, pricing on Netflix’s paid membership plans ranged from $1 to $32 per month, and it had 301 million (31 crore) paid subscribers globally.
Netflix also earns revenue from these relatively smaller but important sources:
- Advertisements are shown in its ad-supported lower-cost subscription plan.
- Strategic partnerships with telecom companies, cable operators, and device manufacturers.
- Content licensing and distribution by allowing other platforms or networks to show its original content.
- Selling branded merchandise related to popular shows through its online store and special events.
Which Countries Contribute To Netflix's Revenue?
Out of Netflix’s $39 billion revenue of last year, the major contributors were these regions/countries:
- $17.3 billion: USA and Canada
- $12.3 billion: Europe, Middle East, and Africa
- $4.8 billion: Latin America
- $4.4 billion: Asia-Pacific, which includes India
When Netflix Rejected Amazon’s $15 Million Offer!
Back in 1998, when Netflix was just a one-year-old DVD company, the world's second richest person and Amazon founder Jeff Bezos had offered to buy it for a valuation of $15 million. But instead of accepting the offer, Netflix co-founders Marc Randolph and Reed Hastings had rejected it. But why?
25 years after that incident, Netflix co-founder Marc Randolph revealed the reasons for turning down Amazon’s mega offer in 1998 in a tweet. Here’s what he had said:
“25 years ago, in 1998, Reed and I flew to Seattle to talk about selling Netflix to Amazon. The meeting went well, and Jeff Bezos floated a price of $15 million.
That wouldn’t have been a bad payday for less than 12 months work, but we thought we were on to something. We had finally gotten the engine to turn over, so we weren’t quite ready to put it in park and hand someone else the keys.
Looking back, I know now that this trip was about much more than just selling the company.
It turns out that there’s nothing like having the option to get out that reinforces your desire to stay in. For Reed and I, this wasn’t a sales trip. This was a commitment ceremony.”
Fast forward to today, Netflix stands tall with an eye-watering valuation of $500 billion!3
References:
1. United States Securities and Exchange Commission, accessed from: https://s22.q4cdn.com/959853165/files/doc_financials/2024/ar/Netflix-10-K-01272025.pdf
2. X, accessed from: https://x.com/mbrandolph/status/1646307380144263175
3. Marco Trends, accessed from: https://macrotrends.net/stocks/charts/NFLX/netflix/market-cap
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