[Op-Ed] The Netflix Miracle: Made Possible by “Exceptional Regulation” and “New Entrepreneurship”

Video rentals → online ordering and DVD-by-mail rentals → monthly subscriptions → streaming services

By producing original series and making strategic investments, it rewrote the rules of platform competition

The largest subscription-based media platform, with 301.6 million paid members, a success driven by entrepreneurship

In the age of AI, it is time for a new entrepreneurial spirit to emerge under a system of “exceptional regulation,” not “exceptional permission”

Ta-dum~!

Everyone probably recognizes this familiar sound and knows where they have heard it. It is Netflix, the very platform that has seeped into our daily lives. The force that made this sound such a natural part of everyday life was not mere luck, but entrepreneurship that kept transforming itself even at the height of success.

The journey of Reed Hastings and Marc Randolph, the co-founders of Netflix, the pioneer of streaming platforms, was not a straight line. They spotted opportunity in inconvenience, changed the market and the world through creative destruction, and survived crises through bold experimentation. It was this mindset that enabled their journey to succeed.

Their starting point was a different way of looking at a small inconvenience. Hastings and Randolph turned the minor frustrations of video rental returns and late fees into an idea. Through experimentation and discussion, they created a system of online ordering and DVD-by-mail rentals, and in 1999 they came up with the new model of a monthly subscription.

But the two did not stop there. As the internet era began, they became convinced that the world would move beyond DVD rentals to one in which people could watch what they wanted, when they wanted, through the internet, and they acted on that conviction. In 2007, they launched the streaming service “Watch Instantly,” deliberately destroying their own thriving DVD-centered business. Around that time, the company had roughly 7.5 million subscribers, laying the groundwork for the early spread of streaming services. The side that changed course first was the one that shaped the trend.

But at a certain point, they ran into limits. The two concluded that if they relied solely on external IP, they could not control either the speed or the direction of their own growth. Indeed, as Netflix’s streaming service gained momentum, IP owners began reducing supply, demanding tougher terms, or even launching similar platforms of their own. Faced with this crisis, Netflix once again chose a bold experiment.

Using Netflix’s vast viewing data and users’ content preferences—including data on what kinds of stories audiences found compelling and which entertainers they preferred in leading roles—they plunged into content production. The result was House of Cards, produced in 2013, the first Netflix Original series. Starting from that point, Netflix made strategic investments in producing original series based on regional viewing data, strengthening its bargaining power, differentiation, and capacity for simultaneous global expansion. In doing so, it rewrote the rules of platform competition.

These decisions were vindicated by results. About 10 years after the launch of its streaming service, Netflix’s global subscriber base had grown to roughly 87 million, and today it stands as the largest subscription-based media platform, with 301.6 million paid members. This is a case in which entrepreneurship drove growth.

Such entrepreneurship was possible because it was supported by an institutional foundation. In the United States, the DMCA’s safe harbor provisions and DRM protections reduced legal uncertainty in online video distribution, allowing infrastructure and platforms to grow rapidly. That favorable environment indirectly supported the spread of the streaming subscription model and Netflix’s growth. In addition, the JOBS Act gradually eased the documentation and procedures required for new companies going public, making entry into capital markets easier and faster.

By contrast, Korea still faces a perception that institutional interpretation is complex and that its regulation-centered system is difficult to predict, while high entry and disclosure burdens remain in place, making even the very first step easy to approach cautiously.

Just as IT opened up a new world, AI is now preparing to open up another. In the midst of this opportunity, the time has come to foster the entrepreneurial spirit of a new era under a system centered not on “exceptional permission” but on “exceptional regulation.”

Junse Kim

Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [칼럼] 넷플릭스 신화, ‘예외적 규제’와 '새로운 기업가 정신'으로 가능

Author: Jun-se Kim

Date: 2025-12-16

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&idx=28403