9781422277362

Tech 2.0

quality remained poor, and the video image could not fill an entire computer stream. While efforts at improving streaming technology went on, changes were happening in how consumers could watch movies. In 1997, Reed Hastings founded the company Netflix. His idea was to let consumers use their computers to choose the DVDs they wanted, then receive the discs in the mail. By only using DVDs, Hastings saved money, since they were cheaper to mail than videotapes. He also as- sumed that in time, more people would switch to DVDs because they were easier to use and had better picture quality than tapes. Rental Revolution S tarting in 1998, Netflix customers began renting discs. People could buy them as well, but Hastings soon stopped selling the discs to focus on renting them. He made other changes, too. In 1999, he introduced a subscription plan with no late fees. Most video stores, and Netflix too, usually charged the fees when customers didn’t re- turn their rentals on time. Now, though, Netflix customers could keep discs as long as they wanted, but they could only have up to four discs at one time. When they sent one disc back to Netflix, they received the next one on their list of choices. By 2000, almost all customers were on the subscription plan, and Netflix soon stopped renting discs one at a time. As the company grew, Netflix offered more features. One was giving suggestions of movies people might like to watch, based on the movies they had already seen. The computer program that made these suggestions used what’s called an algorithm . The program also looked at the viewing habits of other people with similar tastes

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