They codenamed the top-secret project “Griffin,” after Tim Robbins’ character from the film “The Player.” After all, that’s what the team was building: The Netflix Player, a black and boxy device, as plain and compact as a necklace case, which subscribers would hook up to their televisions to stream movies and TV shows from the web. Netflix executives knew it could fundamentally change how the company delivered content to its customers, who were used to waiting days for DVDs to arrive by mail. Soon, Netflix could leverage the digital content deals it was striking with studios to dominate the living room, a war still waging today between industry giants like Apple, Google, and Microsoft.

It was December 2007, and the device was just weeks away from launching. Yet after all the years and resources and talent invested in the project (a team of roughly 20 had been working on it around the clock, from ironing out the industrial design and user interface to taking trips to Foxconn to finalize production details), Netflix CEO Reed Hastings was having serious second thoughts. The problem? Hastings realized that if Netflix shipped its own hardware, it would complicate potential partnerships with other hardware makers. “Reed said to me one day, ‘I want to be able to call Steve Jobs and talk to him about putting Netflix on Apple TV,'” recalls one high-level source. “‘But if I’m making my own hardware, Steve’s not going to take my call.'”





To the surprise of most employees at the company, Hastings decided to kill The Netflix Player, and spin the team out as a separate company. His decision, made almost exactly five years ago this month, was one of the riskiest moves in Netflix’s history. But it also proved to be one of Hastings’ most prescient. By shelving its hardware and remaining an agnostic platform, Netflix was able to transform itself into a digital powerhouse and become the dominant player in subscription streaming video. Its service is now ubiquitous, accessible on computers, smartphones, tablets, Internet-connected TVs, Blu-ray players, set-top boxes, and video game consoles. Last quarter, its 29 million streaming members consumed more than 3 billion hours of TV shows and movies, making Netflix the biggest cable TV network in the U.S., according to one analyst. But the story behind Hastings’ decision, which is more clearly justified in hindsight, shows his unique grasp of the industry and willingness to buck the system.

To understand how radical of departure this was internally, says Roku CEO Anthony Wood, who was then leading project Griffin, “You have to understand the dynamic inside the company.” For years, engineers had been developing the technology behind product, such as video buffering and compression tools, which would allow Internet bandwidth to keep up with streaming media. Hastings had been toying with the idea since before streaming was common and YouTube was a household name–back when Netflix even considered building a DVD player that housed a hard drive, where movies could be downloaded and temporarily stored.





The Netflix Player had gone through the typical development stages, which are traditionally referred to as EVT, DVT, and PVT–that is, engineer, design, and product validation testing. During this process, the team refined everything from the software and user interface to the device’s thermal requirements and supply chain. (Working with Frog Design on the form factor, the group imagined at one point dying the device red to look like a Netflix envelope.) The hardware had gone through endless rounds of product reviews in front of Hastings in the Netflix amphitheater. Internal beta testing had been done; marketing materials had been printed; prices had been set; and advertisements were being shot.

“We built our own streaming player and hardware, which was a bold step for an Internet company. And the whole time, we had been showing demos at company meetings,” Wood recalls. “Everyone was really excited. Everyone really wanted to ship the Netflix player.”





The company was so amped that a set of employees even produced a parody video of the project for a quarterly business review in October 2007. During the all-hands meeting, the entire company saw its future on the big screen, in a video detailing “The Griffin Initiative.” A spoof on the Dharma Initiative from the TV show Lost, which was wildly popular at the time, the video poked fun at the company’s production process. “Product managers…used highly evolved scientific processes,” says the narrator, as Netflix employees in lab coats throw darts at a wall and play Pong. The video also features a trip to a Foxconn supplier outside Shanghai–one of the first times video was shot inside a Foxconn manufacturing facility, a source tells me. There, the video walks through the manufacturing process, from the Netflix Player’s robotically mounted parts to its hand-placed components.