How Netflix streaming works: As one of the most popular streaming services, Netflix has set a new culture of online streaming. Before the pandemic, the segment already had millions of subscribers. Still, the dramatic switch to online forced people to choose the most convenient streaming services to watch, entertain and be aware of the latest news. Thus, the industry generated a 10% rise during the pandemic, and Netflix was the leading service. Creating a Netflix-like service is exceptionally beneficial in current market demand. Still, if you are just starting with creating a business plan and need a cost estimation, we have created a guideline on starting with a streaming service and planning your budget.
Why is it worth starting with a streaming app? Market overview
Netflix managed to grow into the most influential video streaming service worldwide thanks to its implemented business model and strategy in a few years. By 2020 Netflix already had 204 million subscribers and registered $25 billion in revenue for the same year.
How to have your share in the global video streaming market? The market size valued at $50.11 billion in 2020 and predicted to grow at a CAGR of 21% up to 2028 is one of the most promising industries for investment. Starting now with a streaming service like Netflix can be a serious business decision.
The following vital trends have changed the streaming service industry making it one of the essential parts of our lives.
- Live content is taking over as one of the main trends
- The expansion of 5G boosts the penetration of streaming services
- Machine learning impacting user experience
- Co-viewing is the new way to be connected even on days of social distancing
- Subscription bundle as a new subscription model
- User experience as the key takeaway
How Netflix streaming works
Video streaming services are made to make us feel comfortable and focus on enjoying the content. Behind this experience, a smooth operating system brings OTT (Over-The-Top) networks to subscribers. The basic principle of Netflix is streaming TV shows and movies from the servers to the users’ screens through one of the most advanced ensembles of equipment and network infrastructure.
The Netflix content is stored in numerous servers worldwide, and at least 10 of them will be found near you. The service is kept running non-stop with minimum to zero downtime.
The process of streaming can be divided into six parts that follow each other.
1. Subscriber content request. The cycle begins with an HTTP request for a video to a Netflix server sent out to the Internet via the ISP (Internet Service Provider). Based on the ISPs, Netflix identifies the subscriber’s location and routes the request to the nearest server.
2. Resolvers passing requests to the Netflix domain’s autoreactive server. A DNS lookup is initiated upon the subscriber’s request.
3. Handling the request using a microservice architecture. Those services are running on the cloud and retrieve the content using API.
4. Content is delivered from a storage location. Netflix processes the content with the help of advanced encoding techniques to optimize performance.
5. Edge locations determine where to route the subscriber request and optimize content delivery. To accelerate content delivery, Netflix installs its devices at ISP locations worldwide to accelerate content delivery.
6. Streaming content to the subscriber. The greatest thing about Netflix is delivering a seamless user experience through different devices and platforms.
How to create a streaming App like Netflix?
Where and how to start a streaming service? Before thinking of the tools and equipment for streaming, the project goes through planning and implementation stages:
- Choose a niche. In the first stages of idea and business planning, it is vital to decide your niche, whether you will deliver entertainment, fitness, or education content.
- Plan your content. The quality content is the basis of the service and warranty for success. You can either use videos from other distributors or create your content.
- Study the streaming app requirements. In the era of smartphones, the product is considered successful and prospective if available on all devices. Aside from mobile compatibility, the service should have stable and quality connections to broadcast 4K videos. The service should use a cloud hosting platform to deal with big data and tons of video content.
- Create UI/UX. First things first. Whether your streaming service is good enough to keep it or not, the user understands from the very first moments of using the app. It means UI/UX are cornerstones of project success. Go for a simple and engaging design that is easy to navigate and will make users love it.
- Develop MVP for different platforms. Create an MVP of streaming service with a competent development agency to start testing the waters of customers and competitors.
- Find your target audience and focus on it. In the stages of project planning and defining a niche, it is wise to draw the buyer persona and understand his needs. Thus it will be easier to deliver quality content and get customer satisfaction.
- Choose the monetization model. On-demand services that would be popular and make money should have a monetization model. Streaming services like Netflix implement three models equally important and valuable.
- Subscription view
- Gather feedback. The goal of an on-demand streaming service is to deliver quality content to the audience. After deployment, it is critical to gather feedback and analyze each user’s needs and future upgrades. Reach your audience through social media and newsletters.
With a clear picture of the project and its components, it is much easier to find the answer “how much does it cost to build a streaming service.” As a recap, the total cost of creating a Netflix-like app may range from $150.000 to $250.000, depending on the complexity. How Netflix streaming works
Netflix business model
The success of any project is the business model and the key takeaways leading the project. As a role model, let’s discuss Netflix.
|Key Factors||Advantages||Disadvantages||Value propositions|
|Original contentAffordable subscriptionGreat UISupport all devices and platforms||Exponential growthPremium subscription plansOffline downloadLow-price mobile streamingGlobal customer baseExploit ad-based model||Lack of green initiativesLack of quality customer support||High-definition moviesUnlimited access to TV shows30-day trialMembership cancelationNo commercial ads|
How does Netflix make money?
The most significant part of the revenue of Netflix is generated through paid subscriptions. Users can choose from basic, standard, and premium plans, and the more premium subscribers, the higher the revenue. As for target audiences, Netflix has long broadened the geography and user persona, targeting locals and the international market and audiences.
What is needed for streaming?
The more technical part of the question includes building streaming software and deciding on necessary hardware for starting a streaming service: a stable internet connection, a camera, a microphone, and supporting tools to improve continuous streaming.
Technology stack for Netflix-like service
The full tech stack of Netflix-like service may be as follows:
|Database||Cassandra, MySQL, Oracle|
|Cloud Hosting||Amazon EC2|
|Cloud Storage||Amazon S3|
|JS Libraries||WinJS, React|
|Operating System||FreeBSD; Serverwhole: Nginx|
|Code collaboration and version control||GitHub|
|Server Management||Sumo Logic|
How does Netflix work, and how much does it cost?
The popularity of Netflix lies not only on quality content and scalability but also on affordable subscription plans that can be updated or terminated without further trouble.
There are three subscription plans on Netflix:
- Basic plan – $8.99 per month. Videos can be watched without high definition and only on one screen at a time.
- Standard plan – $12.99 per month. HD videos for two simultaneous viewings.
- Premium plan – $15.99 per month. 4K viewing on four screens. How Netflix streaming works
Total Cost Of Netflix like App Development
The cost estimation of any application and project cannot be based on simply calculating the rates and hours of development. Much depends on the complexity, platforms, technologies, and dev team. For on-demand services like Netflix, the functionality and quality of products are a must, so cutting on development expenses may result in project failure. Before cost, estimation considers the list of app features that comprise the cost.
- User registration
- Payment gateway
- User profile
- Content search
- Push notifications
- Commenting and messaging
- Video settings
- Language support
- Admin panel
The shortlist of features of MVP can be upgraded with “can have ” features as well but no sooner than the second release.
Netflix, already generating more than $7,3 billion for Q2 2021, is a role model for starting with a streaming service. The digital era, our shifted reality, and consumer demands give us all the chances to succeed in this segment. Start planning your business, find a reliable development agency and work on building a new competitive product. How Netflix streaming works