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Comment by andjones | Hacker News Reader

I am curious about why Netflix has succeeded so well with regard to streaming movies and so much TV content. There are competitors, Hulu and YouTube, but Netflix seems to be winning. I think there are three possibilities:

(1) They got lucky. Netflix made the good deals early on. After a few of these, the deals simply snow ball.

(2) Netflix has a captive audience created through their DVD rental service. Netflix gives us DRM'ed content we can view online and we applaud it because we already love getting those red envelopes in our mailbox.

(3) Their distribution network is superior and is the best to deliver all this content.

To me (2) seems the most likely. Perhaps is a combination of all 3.

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I think you hit it with #2.

Netflix created a huge following of normal, non-techie folks with their brilliant distribution 'hack' (aka using regular mail); when people started to see Netflix on their xboxes and ps3's, they understood what they were about already and it was easier for them to build up a following on the digital front.

Imagine if they'd tried to do that first - aka bypassing the whole mail/red envelop thing - people wouldn't have a clue what they were about or why it was awesome.

I always wondered why they were called 'Netflix' when you only got DVDs in the mail.

Actually no, I think it was fairly obvious they were intending to stream stuff online from the start and the mail thing was just the setup.

As a Netflix subscriber, your (3) is probably the closest. My wife and I signed up for Netflix because we didn't want to pay for cable. Netflix's streaming service was the first to offer an easy path to get content to the TV. Roku's player is why we keep paying for Netflix.

I think (2) is dominant. Netflix has outstanding customer service, which made my wife and me incredibly loyal and happy customers. DVD scratched? They'll generally instantly mail you a replacement and tell you to just mail the scratched one back when you get a chance. Something got lost in the mail? No problem, they bite the cost, not you.

We use their streaming service more than physical DVDs these days, but we definitely remember how we were treated as early customers.

Seems pretty straightforward to me: Hulu has a much smaller catalog than Netflix, and is watchable on a lot less hardware. The only content they soundly trounce Netflix in is "current" TV shows, but how many people a) prefer watching TV on their computer over paying for cable TV + a DVR, AND b) prefer paying Hulu for that privilege over just torrenting everything?

I don't see how Netflix is competing with YouTube at all.

They also have pretty stringent anti-piracy technology through Silverlight. Much harder to grab content compared to Hulu or Youtube.

iTunes has a captive audience too.

The main difference is the size of the catalog (netflix wins), and the pricing structure. People seem to like Netflix's all-you-can-eat for a flat fee structure.

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