Blockbuster used to be the place to get all your home media needs every Friday night.
Until they hit Reed Hastings with a $40 late fee for Apollo 13.
Now Netflix is worth $400+ billion. And Blockbuster has withered to one location in Bend, Oregon—which is basically just a tourist attraction.
Keep reading to find out how Netflix solidified its place on our screens. 📺
Read time: 3.3 minutes ⚡
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Imagine this…
You’ve got a 7 a.m. call tomorrow and a to-do list that didn't stand a chance today.
But it’s 9:42 p.m., and you’re four episodes into a new, wildly popular Netflix show.
Tbh, it doesn’t deserve the hype it’s gotten.
But this episode just ended with one of the best cliffhangers you’ve ever seen.
You glance at the clock as the credits briefly roll and the “Next episode starts in 5…4…3…” button pops up in the bottom right corner.
You could be a responsible adult, stop now, and get a reasonable amount of sleep.
But something in your brain just has to know what happens next.
“Just one more episode,” you think as the next episode starts automatically and you lean back into the couch.
Next thing you know, it’s 1:45 a.m.
You finished season one in just one sitting. You regret nothing.
Why did you keep watching this show when you had to be up super early?
In today’s special edition of Why We Buy 🧠, we’ll explore a well-known company to see how they use buyer psychology principles in their business.
This week we’re diving into Netflix—the streaming giant that built a $400B business on the power of just one more episode.
Let’s get into it.
🤑 A Look Inside Netflix
In 1997, Reed Hastings did what anyone does after getting hit with a $40 late fee from Blockbuster…
He co-founded his own DVD rental service called Netflix.
The twist? Get the DVDs delivered straight to your home and be as late as you want returning them—just pay a set fee every month.
With popularity rising, Netflix gave Blockbuster the option to buy them out for $50 million in 2000.
They declined. But that was the best possible outcome for Netflix.
By 2007, Netflix pivoted to streaming. By 2012, they were making their own original content.
Today, they operate in more than 190 countries, pull in $40+ billion in annual revenue, and have 325+ million paid subscribers worldwide.
🧠 How Netflix Uses Buyer Psychology
Netflix turned the headache of a $40 late fee into a $400+ billion company by understanding one thing: human behavior.
Here are some ways they leverage buyer psychology to keep us watching:
Reward Prediction Error
Slot machines are one of the most addictive machines ever built. Not because you always win, but because you sometimes win.
Netflix borrowed a page from that playbook.
Maybe the next episode will be great. Maybe it’ll be a disappointing dud. (After all, not every episode can be an award-winner.) But your brain can't tell which one is coming, and that’s the point.
The unpredictability of what happens next floods your brain with dopamine and keeps your hand off the remote—and your eyes glued to the screen.
That's not a coincidence. We’re hardwired to follow our “herd.” So when we see a crowd pointing at something, we look.
And when everyone's watching the same show, not watching it starts to feel like a social liability.
Sunk Cost Fallacy + Autopilot Mode
You're eight episodes into a show that lost you somewhere around episode four.
It's not great. You know it's not great. But you've already put in four hours, so you keep going.
The double whammy? Autoplay puts you in autopilot mode making it frictionless to keep watching.
And the more episodes you finish, the harder it becomes to call it quits.
🤔 Thinking About Your Business
You don’t have to be a streaming giant to make pressing “play”—errr, “buy”— feel irresistible.
Ask yourself…
Q: How can you use positive unpredictability to keep buyers coming back?
Predictable = forgettable. Think about where you can introduce a little surprise into your customer experience, like an unexpected bonus inside a product or a mystery gift in a launch. When the reward isn’t guaranteed, but buyers know they’re given out, then anticipation becomes half the fun.
Q: Are you showing your buyers what everyone else is already doing?
Your customers are watching what others have already done before they make a move. That’s why case studies, sales numbers, subscriber counts, and "trending" labels aren't vanity metrics—they're proof that makes a buying decision feel a helluva lot less risky. Because if other people like them are already in, the decision gets a lot easier.
Q: Are you making it easy to keep going?
Think about where your customer experience creates unnecessary friction that’s likely to repel—such as a confusing checkout, a long gap between emails, or a website that takes seven seconds to load—and smooth it out. Momentum is fragile—you’ve gotta protect it at all costs.
💥 The Short of It
Blockbuster had every advantage: the brand recognition, real estate, and existing customer base.
Netflix had a $40 late fee and a better understanding of human behavior.
We all know how that ended.
Your product doesn't have to be the biggest or the flashiest. It just has to be the one that understands customers best.
Until next time, happy selling!
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