Netflix’s Origin Story: How the Streamer Killed Blockbuster Video, Snagged ‘House of Cards’ From HBO and Changed Hollywood Forever

variety.com:

Netflix launched as a DVD rental service in 1998, that was its most effective pitch to potential customers — an unmistakable reference to the thing that people hated the most about Blockbuster.

With more than 9,000 locations, Blockbuster was the biggest video rental chain in the world, but it was alienating members because its profits came from charging hefty fines for movies that weren’t returned on time. “It was an obvious sore spot,” Reed Hastings, Netflix’s co-founder, says. “People loved renting movies and watching them at home, but the late fee became the symbol of everything painful about that model.

So we decided to create something different.” Netflix didn’t just do away with late fees by allowing customers to keep movies for as long as they wanted.

It offered subscribers unlimited rentals for a monthly flat fee. As a bonus, it delivered DVDs directly to customers’ homes, eliminating the hassle of having to drive to the local Blockbuster to scour aisle after aisle of movies in search of something to watch.