galealmy talcott saskiah
Map Rousch
I pulled this chapter together from dozens of sources that were at times somewhat contradictory. Facts on the ground change over time and depend who is telling the story and what audience they're addressing. I tried to create as coherent a narrative as I could. If there are any errors I'd be more than happy to fix them. Keep in mind this article is not a technical deep dive. It's a big picture type article. For example, I don't mention the word microservice even once :-)
Given our discussion in the What is Cloud Computing? chapter, you might expect Netflix to serve video using AWS. Press play in a Netflix application and video stored in S3 would be streamed from S3, over the internet, directly to your device.
Another relevant factoid is Netflix is subscription based. Members pay Netflix monthly and can cancel at any time. When you press play to chill on Netflix, it had better work. Unhappy members unsubscribe.
The client is the user interface on any device used to browse and play Netflix videos. It could be an app on your iPhone, a website on your desktop computer, or even an app on your Smart TV. Netflix controls each and every client for each and every device.
Everything that happens before you hit play happens in the backend, which runs in AWS. That includes things like preparing all new incoming video and handling requests from all apps, websites, TVs, and other devices.
In 2007 Netflix introduced their streaming video-on-demand service that allowed subscribers to stream television series and films via the Netflix website on personal computers, or the Netflix software on a variety of supported platforms, including smartphones and tablets, digital media players, video game consoles, and smart TVs.
Netflix succeeded. Netflix certainly executed well, but they were late to the game, and that helped them. By 2007 the internet was fast enough and cheap enough to support streaming video services. That was never the case before. The addition of fast, low-cost mobile bandwidth and the introduction of powerful mobile devices like smart phones and tablets, has made it easier and cheaper for anyone to stream video at any time from anywhere. Timing is everything.
Building out a datacenter is a lot of work. Ordering equipment takes a long time. Installing and getting all the equipment working takes a long time. And as soon they got everything working they would run out of capacity, and the whole process had to start over again.
The long lead times for equipment forced Netflix to adopt what is known as a vertical scaling strategy. Netflix made big programs that ran on big computers. This approach is called building a monolith. One program did everything.
What Netflix was good at was delivering video to their members. Netflix would rather concentrate on getting better at delivering video rather than getting better at building datacenters. Building datacenters was not a competitive advantage for Netflix, delivering video is.
It took more than eight years for Netflix to complete the process of moving from their own datacenters to AWS. During that period Netflix grew its number of streaming customers eightfold. Netflix now runs on several hundred thousand EC2 instances.
The advantage of having three regions is that any one region can fail, and the other regions will step in handle all the members in the failed region. When a region fails, Netflix calls this evacuating a region.
The header image is meant to intrigue you, to draw you into selecting a video. The idea is the more compelling the header image, the more likely you are to watch a video. And the more videos you watch, the less likely you are to unsubscribe from Netflix.
The first thing Netflix does is spend a lot of time validating the video. It looks for digital artifacts, color changes, or missing frames that may have been caused by previous transcoding attempts or data transmission problems.
A pipeline is simply a series of steps data is put through to make it ready for use, much like an assembly line in a factory. More than 70 different pieces of software have a hand in creating every video.
The idea behind a CDN is simple: put video as close as possible to users by spreading computers throughout the world. When a user wants to watch a video, find the nearest computer with the video on it and stream to the device from there.
In 2007, when Netflix debuted its new streaming service, it had 36 million members in 50 countries, watching more than a billion hours of video each month, streaming multiple terabits of content per second.
At the same time, Netflix was also devoting a lot of effort into all the AWS services we talked about earlier. Netflix calls the services in AWS its control plane. Control plane is a telecommunications term identifying the part of the system that controls everything else. In your body, your brain is the control plane; it controls everything else.
In 2011, Netflix realized at its scale it needed a dedicated CDN solution to maximize network efficiency. Video distribution is a core competency for Netflix and could be a huge competitive advantage.
The number of OCAs on a site depends on how reliable Netflix wants the site to be, the amount of Netflix traffic (bandwidth) that is delivered from that site, and the percentage of traffic a site allows to be streamed.
Within a location, a popular video like House of Cards is copied to many different OCAs. The more popular a video, the more servers it will be copied to. Why? If there was only one copy of a very popular video, streaming the video to members would overwhelm the server. As they say, many hands make light work.
Right now, up to 100% of Netflix content is being served from within ISP networks. This reduces costs by relieving internet congestion for ISPs. At the same time, Netflix members experience a high-quality viewing experience. And network performance improves for everyone.
What may not be immediately obvious is that the OCAs are independent of each other. OCAs act as self-sufficient video-serving archipelagos. Members streaming from one OCA are not affected when other OCAs fail.
Netflix is also making basic plans unavailable to new customers in several countries, including the UK and US. Basic plans in those countries have now been replaced with standard subscriptions with ads. Ad-supported plans are much more affordable, costing 4.99 per month in the UK and $6.99 per month in the US.
Please note: the prices included in our study are the base price as advertised by Netflix. They do not include the various taxes and other charges users may face. We are aware that several countries, including Argentina, have these charges but our study focuses on the price charged by Netflix.
Second, we evaluated the cost per month in each country and how these shape up against others (based on current exchange rates at the time of writing). We have also analyzed the 13 countries with ad-based subscriptions (Australia, Brazil, Canada, France, Germany, Guernsey, Italy, Japan, Mexico, Spain, South Korea, UK, and US) separately to see how these plans compare.
At the other end of the scale are a number of African and European countries and Fiji where none of their plans are cost-effective, despite recent library growth across the majority of these countries. This is due to extortionate monthly costs (Liechtenstein and Switzerland) or library sizes that are more than three times below average (Zambia, Seychelles, Uganda).
The homeland of Netflix itself, the US, also features as one of the least cost-effective countries across all of its plans. This is, again, due to its average library size and above-average monthly costs. It ranks as the eleventh, twenty-first, and seventeenth least cost-effective country for its basic, standard, and premium plans respectively.
One of the biggest advantages of streaming platforms over standard TV channels is their lack of adverts. So are the cheaper plans with ads on Netflix worth it? And do they offer the best value for money when we compare them to basic plans without ads from around the world?
It probably goes without saying that all 13 countries save a reasonable amount of money per title when opting for the standard plan with ads. But as the above table demonstrates, some get a better deal than others.
One of the most expensive countries, Guernsey, saves the most per title when choosing the standard with ads plan (saving nearly $0.0018 per title), while Brazil (which boasts the most cost-effective standard with ads plan) saves a fourth of what Guernsey users do.
Here we can compare all of the countries Netflix is available in (245 in total) to see which countries pay the most and least for their subscriptions on a cost-per-month basis. We can also see just how the recent price hikes and cuts have affected these costs.
The basic subscription tier lets you stream content in 720p HD on one device at a time. Both standard plans (with ads and ad-free) support 1080p full HD streaming and up to two devices at once. Only a premium subscription allows you to watch Netflix in 4K UHD on four supported devices at a time.
Netflix discontinued the Basic plan in some countries (including the US and the UK) as part of its efforts to adapt to the latest market trends and enhance its service model. The strategy is aimed at simplifying the subscription offerings and encouraging users to opt for other plans like Standard with ads or Premium, which provide more features or content. Obviously, these plans bring more financial gain to the company too.
In 2023, Netflix lost customers. During the second quarter of the year, the company reported a loss of approximately 970,000 subscribers. This was the largest quarterly subscriber loss that Netflix experienced since it launched. The good news for Netflix is that this loss was less severe than expected. Netflix had initially projected that it was going to lose 2 million following unexpected growth caused by the pandemic.
During the early phase of the pandemic in 2020, Netflix gained nearly 26 million subscribers in the first half of the year. Following this explosion, a readjustment was always expected and the fact that it lost 1 million fewer subscribers than predicted actually demonstrates impressive retention.
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