Index:

1. Introduction to the History of Netflix
2. Netflix’s Subscription-based Business Model
3. Competition with Blockbuster
4. Netflix launches Streaming Video on Demand
5. Partnership with Hardware Platforms
6. Shift to the cloud
7. First Major Content Licensing Deal
8. Netflix and the Culture of Binge Watching
9. Original Programming
10. Separating DVD and Streaming Video
11. Domestic Growth in US and International Expansion
12. Conclusion: From Dot Com Bubble to Baring its FANGs

How did Netflix Start?

History of Netflix

In this first edition of our multi-part blog series on the streaming video giant, we take you back to the history of Netflix & how Netflix has evolved over the two decades of its existence. Netflix started as a personalized web-based movie recommendation and rental system, transforming over the years into a streaming video giant. The management’s commitment to digital content has enabled Netflix to emerge as the biggest name in the streaming video industry, and more importantly, to stay at the top of its game as it expands globally and seeks to capture increasing audiences internationally.

Founded in 1998 by Reed Hastings and Marc Randolph, the history of Netflix’s founding must be situated amidst the dot com bubble. This was a time when online businesses would sell consumer goods directly via their dot com domains. Amidst the excitement around internet-enabled delivery of services and goods, companies like Pets.com, WebVan and Kozmo.com offering to sell goods directly to consumers raised funding from venture capital firms. However owing to flawed business models which meant losses at each sale, these companies burned cash from the outset. The dot com bubble crashed in due time.

In September 1999 Reed Hastings implemented a subscription-based business model. Netflix, although unprofitable until the mid-2000s, survived the dot com bubble. The company offered DVDs via US Postal Service, and had put up their catalogue online. Relying on US Postal Service’s delivery meant that Netflix could focus on their core offerings of a curated and personalised catalogue.

Netflix’s unique offering was its web-based catalogue of films. Instead of having storefronts, the primary means by which customers could access the catalogue was online. This meant that every user in every part of the country could have access to the full library that Netflix possessed, rather than being limited to the titles the nearest stores carried. This also meant that users could shop around for the films they wanted to watch in the leisure of their homes.

Netflix’s Subscription-based Business Model

The company at the time struggled with two fundamental problems in their business model. One was that because the DVD was sent via mail, it would take anything between one day to 4 days for the shipment to reach the subscriber. Even though people were likely to try Netflix, conversion to repeat rentals was low. Secondly, people would far more inclined to rent out the latest releases. For the company to break even on the cost of purchasing a DVD to rent-out, they would have to generate 15-20 rentals for each DVD.

Two of the most important elements in the history of Netflix business model emerged out of their responses to the problems. The company shifted to a recurring-revenue model – the subscription model – which improved second-time movie rental rates considerable. Customers were locked in to the platform, and was therefore much more likely to try rentals again. The company also created a queue, one in which users would select the movies they would like to watch next. This speeded up the process for subscribers to receive another DVD once they returned their first one. This also eliminated the point of late fees charges – the motivation for returning DVDs was to get another DVD to watch by mail. Netflix business model of subscriptions was a response to the problem of retaining customers.

Secondly, to enable maximum utilisation of their DVD content catalogue, the company created their movie recommendation system. Through Cinematch, Netflix would recommend shows for their subscribers to watch. The point for this was to alleviate pressure for DVD rentals away from new releases, to a more uniform renting out of their content library. This solution has over the years become considerably sophisticated, and drives how customers experience Netflix and how the company makes decisions when acquiring new content.

Netflix’s response to these problems was reflective of how the management was focused on building a sustainable business model, as opposed to growing up too fast. Instead of focusing on building a huge content library the company instead optimised their DVD-on-mail solution for their existing library. This business decision was what helped the company survive the crash that followed the dot com bubble.

Barry McCarthy, CFO of Netflix from inception till 2010, spoke to the Unofficial Stanford Blog on Reed Hasting’s idea of the subscriber-based model in an industry where video rentals were centered around retail stores:

“It was Reed’s insight that the subscription model would resonate with consumers in a compelling way. He re-engineered the Web site and software to support a subscription model…we began to grow exponentially overnight. In 1998, I think the business did $1 million in revenue. In 1999, we did $5 million, then $35 million and then $75 million and $150 million and then almost $300 million…We were I think five years to $500 million and another three years to a $1 billion, all because of the subscription model.”

Netlfix’s business model of subscriptions was strengthened in February 2000 when Netflix started their Unlimited Movie Rental programme. This ‘All-You-Can-Watch’ subscription model, at a fee of $19.95 per month, offered customers unlimited movie rentals in a month, receiving upto 4 DVDs at a time. With a view towards maintain subscriber goodwill and loyalty, the company eliminated all per-movie, shipping and late-fee charges. Netflix, under the direction of technical head Neil Hunt, had by then also implemented their content recommendation system – Cinematch.

Netflix’s content curation was headed by Ted Sarandos, Chief Content Officer. Sarandos joined in 2000, and had prior experience in movie and television distribution. He has managed Netflix’s content offerings over the years, initially curating and providing inputs for the movie recommendation system, and is now a major cog in the wheel of the to the company’s original content – Netflix Originals – initiative.

History of Netflix: Competition with Blockbuster

In the history of Netflix, it’s business model and vision in the movie-rental industry was considerably different from that of their chief competitor – Blockbuster. The chief of retail video rental chain Blockbuster, John Antioco, on the other hand believed that video rental was a much more spontaneous process, and that receiving copies in-store and watching immediately was preferred by customers over waiting for days for the DVD on mail.

Amidst this new rental programme, Netflix was losing money. Reed Hastings met with Blockbuster CEO John Antioco in Dallas, proposing to sell a 49% stake in Netflix to Blockbuster for $50 million and in exchange for running Blockbuster’s brand online – Blockbuster.com, while complementing Blockbuster’s offline DVD rental business. However Blockbuster passed on the deal, believing that Netflix, which was not profitable at the time, did not add value to their own business. It was this inability to see the long-term view, which Netflix was committed to, that led to the contrasting fortunes the two companies faced.

Netflix presented a considerable disruption to the business model of retail video rental chains. DVDs would be sent through the US Postal Service. Unlike Blockbuster for which late-fee was often a significant portion of its revenues, Netflix completely eliminated the late fee, with the incentive for returning for the customer being access to another DVD. Netflix’s products key differences were their lack of stores, instead mailing DVDs ordered online, and secondly not charging late fees. It was Blockbuster’s inability to compete with Netflix on these two counts that ensured that the upstart beat the established company in the home-entertainment ecosystem.

Netflix offered their initial public offering (IPO) on March 24, 2002, bringing in $82.5 million. At the time the company was not profitable, making a loss of $4 million on $30.5 million of revenues. This was, however, an improvement over the history of Netflix compared to previous years figures of loss of $38.6 million on revenues of $75.9 million.

In 2004 Blockbuster finally entered into the online DVD rental space. They also removed their late fees charges. However these two changes increased costs and reduced revenues, leading to activist shareholders led by Carl Icahn pressuring the CEO against the strategy. Blockbuster’s online initiative lost momentum and the late-fees was reinstated.

Blockbuster’s growth came and market dominance came about in a period when 80% of the company’s shares were held by Viacom. In 2004 Blockbuster decided to make an outlay of $200 million on Blockbuster online, and waived their late-fees charges which would have led to revenue decline of about $200 more. However Viacom exited the company when this strategy was adopted, believing the new path as not being aligned to its own vision. The challenge that the market dominating company was facing was being unable to reinvent its business model in the face of technological shifts.

The agile startup Netflix on the other hand continued its growth, achieving growths in both revenues and subscribers, until finally in the 2010s the company expanded exponentially as streaming video technologies matured. John Antioco and executives at Blockbuster on the other hand faced resistance from the new shareholders after Viacom’s exit, who pressured the board to reinstate the late fees and drive down investment in the online business. It was the late entry to the online business, as well as the inability to get the backing of shareholders to implement a top-gear strategy for online video, that ultimately led to Blockbuster’s failure in the face of technological shifts.  

Netflix launches Video on Demand

Netflix put further pressure on competition when they announced the launch of their streaming service in January 2007, as Watch Now. At the time the streaming service was expected to be of use only for power users with broadband internet connections, which were not all that common at the time. Users were required to have a 1 mbps internet connection to be able to stream movies, with a 3mbps connection required for streaming DVD-quality films. Subscribers under the $17.99 plan had access to 18 hours of streaming content. Video delivery was through a special browser applet that subscribers would have to install. By 2008 however Netflix had given access to unlimited video streaming for subscribers to its biggest plan .

“We named our company Netflix in 1998 because we believed Internet-based movie rental represented the future, first as a means of improving service and selection, and then as a means of movie delivery,” CEO Reed Hastings said at the time, “While mainstream consumer adoption of online movie watching will take a number of years due to content and technology hurdles, the time is right for Netflix to take the first step.”

About 1,000 titles were available for streaming online, as opposed to 70,000 that Netflix offered in its DVD mail-to-order business. Although digital delivery was part of Reed Hastings’ strategy from inception, at the time of its launch the streaming service was provided as an add-on to the DVD subscriptions business. The primary motivation at the time was to slow down user churn. Q4 2006 results showed a net margin of 4.9%, with a net income of $12.7 million on $255 million of revenues compared to the history of Netflix. Although it needed to improve its margins, the company had also been seeing subscriber churn of more than 4% each quarter.

Helped by the launch of streaming video, 2007 was the first time in the history of Netflix that it generated upwards of $1 Billion in revenue. Over that year the company’s subscriber base grew 18%, revenues were up by 21% and net income was up by 36%, compared to the 2006 figures. The rise in revenue offset the increased costs from the online video initiative and strong competition helping the company generate higher profits.

Netflix’s approach to starting its streaming video service was a gradual process. Launched in January 2007, the company did not roll out its services for all its users at once, instead gradually scaling up the service offerings, completing it for all customers in June 2007. In hindsight, seeing Netflix’s experimentation with its video delivery infrastructure in terms of optimising for the cloud, this slow and steady approach definitely makes a lot more sense than offering a full fledged streaming service and then dealing with downtime and error rates.

Prioritising building a robust technical infrastructure has helped Netflix keep their first-mover advantage. Oftentimes the first-mover advantage is squandered by technology companies who have to make way for businesses that solve the problem more efficiently. Netflix, however, by relying on a solid content and technical team, has managed to keep its competitive advantage since the launch of its streaming video service.

Netflix uses DRM encryption to protect its content, NetFlix DRM is one of the most secured anti-piracy solutions for premium videos.

In terms of video codecs, H.264 high profile and VP9 are the current Netflix codec, used by them to reach to a large number of users for a smooth streaming experience.

Partnership with Hardware Platforms

As the company started working towards building a streaming video solution, they also started to develop solutions for streaming video through hardware platforms. In 2004/05 the company was considering working with contract manufacturers on DVD disc drives with a video processor, which could download video content over the internet, and then stream it on TV. This model was similar to TiVo, which enabled TV owners to record TV shows on a disc. This was however shelved as competition with Blockbuster intensified and Netflix had to put resources into engaging in a pricing war with the market leader.

In 2008 Netflix began work on a device for streaming videos. Netflix started to work on developing a video player to connect to television, through which streaming video can be played over the internet. However Reed Hastings was concerned that potential partnerships with consumer electronic platforms would be negatively impacted by having their own platform. Roku was subsequently spun out as a separate company.  

For much history of Netflix has had to face questions from cable TV providers whose content it would license, movie studios for movie licensing, as it presented a competition to their respective business models. Being perceived as a threat by the device manufacturers with which it was seeking to partner in the early stages of its streaming video business would hardly have severely limited its growth options. For this reason Netflix decided to spin out the Netflix Player team as a separate company.  

Netflix subsequently partnered with Microsoft for developing a streaming video app for their gaming console. They also later worked with Sony Playstation, developing

Shortly after the launch of Roku, Netflix announced partnership with Microsoft. As part of the partnership Netflix developed a native app for the game console Microsoft XBox 360. This gave access to XBox Live Gold Members access to Netflix on their television via their game console. For Netflix it meant that the market of 12 million XBox Live members was opened up, whereas for Microsoft could market their XBox for the million Netflix subscribers. The deal required Netflix to maintain the streaming video technology exclusively to XBox for an year. Subsequent to that Netflix would develop a Blu-ray disk based streaming video solution for Sony’s Playstation. The company would later go on to generalize the software platform they developed for DVD players to enable Netflix integration via Software Development Kits (SDKs). This also meant that as Smart TVs emerged and prevalence of streaming video over the internet developed over the years, Netflix was essentially prepared and could offer easy integrations.

History of Netflix: Shift to the Cloud

In August 2008 Netflix experienced a major database corruption, and could not ship out their DVDs for three days. This was the stimulus that led to Netflix opting to host their business logic on the cloud. This cloud migration would take place for the main part in the period of 2010-2011, and would only be completed in 2015, when the company finally setup its billing infrastructure, the most sensitive part of its business operation, on the cloud. The complete shift to the cloud was a pathbreaker in the tech industry. Throughout the history Netflix, it has built a highly robust cloud infrastructure, which has enabled the company to scale up seamlessly as it has seen exponential growth and as it has expanded to 190+ countries.

First Major Content Licensing Deal

The history of Netflix saw a major change when in 2008 it  agreed a deal with Cable TV channel Starz to broadcast their content library for $30 million annually. Starz’s library of 2500 movies and TV shows, including movies Disney and Sony Pictures, became available for streaming on Netflix. The deal was a hugely important step in the history of Netflix, as its streaming video service could now offer a wide range of quality content to their video streaming subscribers. Starz on the other hand, probably expecting the streaming video industry to remain a niche segment, did not expect the deal to cannibalize their own PayTV offerings.

In 2011 Starz stopped its content licensing deal with Netflix, even after Netflix offers $300 million for licensing Starz’s library. Starz CEO went on record saying that he considered the deal a terrible mistake for Starz.

History of Netflix and the Culture of Binge Watching

Netflix soon started entering into content licensing deals with television studios. For television studios the income from Netflix’s streaming videos supplemented other geographical licensing deals. Television studios only make episodes of previous seasons available, in the belief that showing the episodes from the last aired/ currently airing season would through online video streaming services would lead to them losing users from the cable platforms, who were the primary monetisation channel for television studios. Netflix would later turn this monetisation scheme on its head when they started licensing original content, becoming a major revenue channel for television studios in their own right.

As more people began tuning into Netflix, content providers found that Netflix helped build audiences for their shows. Cable networks making past seasons and episodes of their television series available on Netflix enabled content discovery. Customers discovering quality cable content on Netflix helped would later tune into the currently airing episodes of the series. This helped boost ratings for television shows such as Breaking Bad and Mad Men, both produced by AMC. Ratings for Season 5 of Breaking Bad were more than double those of Season 1, and many times the ratings of Season 1, largely helped by the audience that Netflix generated for AMC. Netflix helped users catch up to currently broadcasting series, and enabled networks to focus on creating quality content with the knowledge that even a small initial following would convert soon enough to larger audiences.

Shortly before the final season of Breaking Bad aired, the shows’s creator Vince Gilligan reiterated his belief that Netflix helped generate an audience for the show: “Under the old paradigm – using the old technology of simply having first runs and then reruns on networks – I don’t know that we would’ve reached the critical mass that we reached.”

For television studios, apart from the first run of the series on television, revenues are generated from syndicating TV series to other networks after the end of the season or the series. In this environment Netflix comes in as an added source of revenue for TV studios, besides, as seen in the case of Breaking Bad and Mad Men, Netflix has also enabled broader audiences for quality content through what is labelled as “catch-up TV”.

One of the major issues for Netflix has been credential sharing, where users share their passwords with each other. Recently Netflix has been slowly rolling out a feature to tackle this. In Netflix password sharing crackdown, it has started to prompt messages to some users that it suspects are accessing or streaming on borrowed accounts

History of Netflix: Original Programming

In 2011, initiating its strategy to differentiate itself from other services. Netflix started outlaying budget for original programming, with their first original series House of Cards premiering in 2013. Netflix Originals became a critical component of the Netflix Business Model. The original content initiative would enable the company to become less dependent on movie and television studios, giving it leverage over its supply chain of content providers, while helping build a loyal audience. Netflix’s original initiatives would be copied by other OTT providers as well, with companies like Amazon Prime Instant Video and India based Hotstar all investing on originals to broaden their appeal.

Netflix’s decision as to which television shows to license is designed by their content recommendation systems. Their analytics team takes in various factors, including the popularity of the genre, how popular an actor/ director is, and even computing responses to similar content. Because Netflix’s business model does not rely on immediate ticket sales the criteria for a successful series is determined by whether the subscribers on Netflix platform watch the series, and whether the series can inspire a loyal following. The company’s first original license was for House of Cards. The story goes that Netflix ran data on the number of people who rented out the DVD for the UK Television series House of Cards and who watched political dramas such as The West Wing. They likewise computed the numbers who’d shown preference for the films of David Fincher, and who liked Kevin Spacey films.

After finding that a significant percentage of their subscribers are likely to watch such a show, Netflix commissioned two seasons of the series, at a total cost of $100 million. This gamble was spearheaded by content head Ted Sarandos, whose reasoning was that the network effects of Netflix would generate sufficient publicity and viewing figures if the show generated even a small loyal following. The idea of creating content for different interest groups, where interest is defined in a much broader and cross-category way, is what drives Netflix’s content strategy.

The company entered into a six-film deal with Adam Sandler in 2015. The first film under the deal, The Ridiculuous 8 received generally scathing reviews, and yet Sarandos contends that the film is valuable for Netflix’s subscribers as a large number of people are watching it on their platform. The streaming video provider has definitely seen some failures in recent years – Marco Polo and Get Down being two prominent series that could not achieve a critical mass of followers, and therefore being cancelled. The original content strategy is also important for the company as it expands globally, and as it seeks to penetrate international markets it needs to market content suitable for local tastes.

Spinning out DVD and Online Streaming

In 2011, in a move aimed at generating revenues for further investment into their video catalog, Netflix made major changes to their business model. The company separated memberships for DVD rental and online streaming businesses, getting users to buy different subscriptions. Buying both subscriptions would increase the cost for customer by $6 per month, from $10 for the single membership which included both DVD-on-mail and Streaming video, to $8 each for the two services. Netflix also proposed spinning off the DVD business as a separate entity named Qwikster. As a result of this abrupt price hike, 800,000 left the service, forcing Netflix to partially reverse the decision.

Although the price hike remained, Netflix did not spin off the DVD company as a separate entity. Reed Hastings reiterated his belief that the future of home entertainment was in streaming video online, but regretted the communication gap with their customers. Although the move was something of a PR disaster, it was eventually only a blip as the company kicked off its exponential growth. The price rise also helped boost the company’s revenues, putting it in a strong financial position.

Netflix Streaming versus DVDs subscription

There’s no question that Netflix is a powerful force in the entertainment world. The company has completely changed the way we watch movies and TV shows, and it shows no signs of slowing down. But what’s the difference between Netflix streaming and DVD?

Netflix streaming is the company’s primary focus these days. It’s a subscription service that gives you access to a library of movies and TV shows that you can watch on your computer, phone, tablet, or TV. There’s no need to wait for DVDs to arrive in the mail, and you can watch as much or as little as you want.

DVD, on the other hand, is a physical disc that you can rent from Netflix or any other store. You’ll need a DVD player to watch it, and you can only watch it on one device at a time. On a combined average, DVDs also tend to be more expensive than streaming, so you’ll have to factor that into your decision.

So, which is better? It really depends on your needs. If you want to watch TV shows and movies without any commercials, and you don’t mind waiting a few days for new releases, then DVD is probably a better option. But if you want to be able to watch anything you want, anytime you want, then streaming is the way to go.

Domestic Growth in US and International Expansion

The tech innovations in the history of Netflix have ensured that even though the company contributes to over 30% of peak traffic in North America, its impact on the broader internet infrastructure is minimal. Innovations in video encoding and content delivery have ensured that the company has managed to minimize its footprint, meaning that customers continue to get the best possible experience while not impacting other internet services.

In January 2016 Netflix accounted for 37.1% of traffic in North America’s fixed networks. This share declined to 35.2% in June 2016, which can be attributed to encoding efficiencies that Netflix implemented. Per-title encoding optimisation replaced a more general encoding criteria. This ensured that lower bitrates were used for better quality video encoding. For some titles, these optimisations would yield a 20% reduction in bitrates, while achieving a better viewer experience.

The company has innovated in video delivery through the internet by tying up with ISPs to ensure minimal data transfer over the backbone of the internet, so that much of the traffic is routed internally through the ISPs only. Towards this the company’s Open Connect CDN connects through settlement-free peering with most ISPs. The company has also offered to locally cache content at ISPs, through their Open Connect Appliances, which would ensure that streaming traffic would only be local to the ISP.

The business logic of customer data and content catalogue would meanwhile be on the company’s cloud services which are installed on Amazon Web Services. Netflix’s cloud operations run out of three different AWS regions – Oregon (US-west-2), North Virginia (US-east-1) and North California (US-west-1), which ensures that the company’s services remain uninterrupted even when entire AWS regions go down. In the history of Netflix, the company achieved its targeted 99.99% uptime since its move to the AWS cloud.

In January 2016 Netflix launched across the globe. The company’s streaming video service is now accessible in 190 countries, with the only major exception being China, with their cloud solutions scaling up and responding to the demands of global internet requirements.

From Dot Com Bubble to baring FANGs

There has been much internet-enabled transformation in the world that has enabled Netflix’s emergence. The company is a part of the tech industry’s FANGs, an acronym coined by US finance expert Jim Cramer in 2013,  FANGs – Facebook, Amazon, Netflix and Google. Although a relative minnow when compared to FB, Amazon and Google (now Alphabet), the acronym reaffirms how over the two decades in the history of Netflix, it captured a significant mindshare amongst the internet population.

These tech companies have gained the most as the internet has taken an increasingly more significant role in our lives. Mobile phones have made internet access ubiquitous, meaning that for the youngest generations internet now informs global culture much more than other media. Technological behemoths such as Google and Amazon have enabled technical infrastructure in the form of Platform-as-a-service (PaaS) that anybody can use. By abstracting away the technological complexities and leaving more capabilities in the hands of software developers, these companies have enabled the development of technological infrastructure to develop consumer-facing products. This history of Netflix would have been considerably different were it not for the maturing technical infrastructure and internet popularity.

Amidst a decline in market sentiments around tech companies in 2016, Netflix was one of the very few companies to have a steady stock. This signifies the confidence that investors have over the revenue-model of Netflix. Throughout the history of Netflix the company has been a step ahead of market trends – their decisions towards online catalogue of films, then offering an unlimited movie subscription model, then inaugurating streaming video, and finally creating their niche by investing in original content have contributed to the dominant position the company finds themselves in.

In the early 2010s, at a point when its technology no longer served as an effective enough competitive advantage, Netflix took on the incumbent cable television industry by investing in high-quality content. As it reaches saturation in the US market, Netflix needs to expand internationally. Finding the right content formula for international audiences is the challenge facing Netflix.

With this we come to an end of this informational piece on history of Netflix. We hope you found it interesting to read.

Discontinuation of DVD Rentals, Expansion of Live Events, and WWE Agreement (2023–Present)

On April 18, 2023, Netflix announced it would end its DVD-by-mail service on September 29. Users could keep their last received DVDs. Over its lifetime, the service had shipped over 5 billion DVDs.

In October 2023, Netflix promoted Eunice Kim to Chief Product Officer and Elizabeth Stone to Chief Technology Officer. That same month, amid restructuring its animation division, Netflix announced a multi-film agreement with Skydance Animation, starting with the film Spellbound, replacing a previous deal with Apple TV+.

In December 2023, Netflix released its first “What We Watched: A Netflix Engagement Report,” detailing viewership for titles watched over 50,000 hours from January to June 2023. The report, which will be published biannually, revealed that The Night Agent was the most-watched show globally in the first half of 2023.

On January 23, 2024, Netflix announced a major deal with WWE to acquire international rights to its live weekly program Raw starting in January 2025. This agreement, valued at $500 million per year over ten years, includes rights to WWE’s main weekly programs (Raw, SmackDown, and NXT), premium live events, and documentaries, initially covering the U.S., Canada, the U.K., and Latin America, with plans to expand to other regions.

In February 2024, Netflix partnered with Peter Morgan, creator of The Crown, to produce the play Patriots on Broadway. This venture marks Netflix’s first Broadway credit but not its first stage project, as they were involved in producing Stranger Things: The First Shadow in London, both productions sharing lead producer Sonia Friedman.

In May 2024, Netflix hosted its second Netflix Is a Joke festival in Los Angeles, streaming several specials live, including Katt Williams’s Woke Folk and The Roast of Tom Brady, both of which ranked in Netflix’s global top 10. That same month, Netflix announced it would stream both NFL Christmas games in 2024 and hold exclusive rights to at least one NFL Christmas game each year for 2025 and 2026.

In June 2024, Netflix announced plans for Netflix House, a new permanent entertainment venue for fans to experience Netflix series and films, with the first locations set to open at King of Prussia Mall in Pennsylvania and Galleria Dallas in Texas.

FAQs

How much does Netflix streaming cost?

Netflix offers a variety of subscription plans to fit your needs. The plan you choose will determine the number of devices you can stream Netflix on at the same time.

Can I watch Netflix shows offline?

Yes, Netflix shows can be watched offline, but only if you have downloaded them in advance on your device.

How long has Netflix been around or when the streaming revolution started?

Netflix was started in August of 1997 in Scotts Valley, California. Its co-founder, Reed Hastings, had the idea to start the company after he was charged $40 for a late movie rental.

When was Netflix launched in India?

Netflix first launched in India in 2016 and is now one of the most popular streaming services in the country. Netflix offers a wide variety of content in India, including Bollywood movies, Hollywood movies, TV shows, and documentaries. It is one of the few streaming services that offer 4K Ultra HD content in India.

Will Netflix stop mailing DVDs?

Currently, Netflix is offering both DVDs and Streaming services in many countries. Even though it has an inclination toward serving via streaming but the DVD business is not going to stop soon.

When did NetFlix start?

Netflix started on August 29, 1997, in Scotts Valley, California.

How old is NetFlix?

Netflix is 25 years old.

Who created Netflix?

Netflix was founded by Reed Hastings and Marc Randolph.

Siddhant Jain

CEO, VdoCipher. Writes about video tech, ed tech and media tech.

www.vdocipher.com/

The post History of Netflix- Founding, Model, Timeline, Milestones (2024 Updated) appeared first on VdoCipher Blog.

Content creators spend a substantial amount of time creating their content. A lot of TV series you might see on Netflix take months to produce and a lot of money too. It is a bummer to put in all this effort and then your content gets downloaded for free. In some cases, users share their credentials with others and a single account is used for multiple access.

How Does Video Piracy Happen?

In essence, video piracy happens in two ways. That is through credential sharing and video downloading. Piracy of any kind, whether it is movie piracy or piracy of eLearning content hurts revenue. Don’t you think users would rather access the content for free if they had that option?

Here are a few ways by which you might be losing new potential customers and revenues.

Credentials Sharing

Given a choice, anyone would choose not to pay for something which they get for free. But as a content creator, it’s your bread and butter. You might as well take extra effort to curb with this.

Credential sharing happens with streaming services like Netflix, Amazon Prime, Disney Hotstar. Users often buy a single account, share it with friends and family without paying for extra bandwidth or users.  Also, at times with strangers to swap the different subscribed services.

There are different other ways video content is pirated by getting access to the credentials.

• Password Theft – When account credentials are hacked and stolen from the users. These accounts can be further sold by Pirates.
• Endless trials – This one is quite popular among users, as they’d often create fake accounts. Even using different credit cards, to access the content for free and even resold at times
• Bypass of concurrency controls – Pirates hack in the video platform server to tinker with the restriction of the number of devices. This way a single account can be used by multiple users without any restrictions.
• Token theft – Streaming apps or web browsers use tokens to identify the user. Pirates can copy these tokens to other devices and use them again to access the content.

Video Downloading

There are several tools available online, which makes it easy for users to download a video.  By just entering the URL in the tool, they can easily download your video. And from there on it can easily get into all the popular pirate resources.

Video streaming platforms use encryption to protect their videos, but a lot of times they don’t focus too much on key protection. Pirates take advantage of this fact, they put in efforts to find the encryption key. With the key, pirates can easily convert encrypted file back to raw file. Pirates at times also target the storage platform used by the platform to get access to the content before it is even released.

Simulcast Of Live Streaming & TV channels

Capturing and redistribution of live streaming and tv channels has been one of the major forms of video piracy. Live sports are one of the live events which have been pirated massively. According to a study done by sportspromedia, about 51% of sports fans opt for watching pirated video streams.

Pirates use various methods to capture live streaming

• Tampering with video playback software or Android OS
• Recording screens during playback or capturing during a screen-share session
• Using credential stuffing attacks to access and use legitimate viewer details
• Tampering with video to defeat watermarking, such as re-quantization
• Using VPN to access content not available in the geographical region,

The Extent of the problem

You might find a lot of studies on the internet regarding video piracy, but the truth is it’s still difficult to predict the real extent of piracy around the globe. And the sole reason for the same is we haven’t been able to stick with a consistent method to track this problem.

There are many datasets provided by huge commercial companies but they aren’t completely useful and can often be at odds with one another based on methodology.

• A study was conducted by “The European Intellectual Property Office(EUIPO)” regarding the impact of piracy across member states. The numbers showed that approx 13.7 million users are accessing illegal pirate services around the European countries.
• The study also showed that the Netherlands, Sweden, and Spain constituted the highest percentages of offending viewers within their populations, with 8.9%, 8.5%, and 6.9% respectively(the EU average is 3.6%).
• The United Kingdom(2.4 million), France(2.3 million), and Spain(2.2 million) have the largest populations when it comes to using illegal services on a regular basis.
• The picture is yet to be clear in North America. A study by Sandvine showed that around 6.5% of households were regularly communicating with pirate sites. Meanwhile, a report by  Park Associates identified that more than 14.1 million U.S. households accessed pirated videos in 2019, which is approximately 16% of the total pay TV market.
• A study conducted by the University of Amsterdam in 2017 showed the piracy habits across Hong Kong, Indonesia, Japan, and Thailand. Both the Indonesian and Thai populations showed a very high usage of pirated content, with the study estimating between 65% and 54% of their internet populations. Hong Kong registered 27% of their internet population while Japan registered 12% of their internet population (11% of the total population).
• The results were confirmed by the Asia Video Industry Association in 2019 based on the consumer survey report and it was identified that 24% of consumers in Hong kong use internet streaming devices for accessing pirated channels. This number increased to 28% of consumers in the Philippines, 34% in Taiwan, and 45% in Thailand.

From the above-mentioned studies and reports, it can be clearly seen and concluded that video piracy and in particular, TV or Movie piracy, still remains a serious issue globally.

What is the Impact of piracy? 

Various studies have shown that by 2022 the estimated losses to the industry would be as high as $52 billion globally (Digital TV Research 2017) along with massive GDP losses. Talking about The United States only, the GDP losses due to piracy have been estimated between $47 billion and $115 billion (Blackburn et al, 2019).

With a lot of research and studies now available, we are getting to understand the wider impact of this video piracy problem. The American movie and TV production and distribution industry support over 2.6 million jobs, and in 2017 alone, it generated $229 billion in revenue. A report by Blackburn, Eisenach, and Harrison on the impact of movie piracy on the U.S. economy, estimated that in 2017 between 230,000 and 560,000 jobs were lost in the U.S. as a direct result of pirating activity.

Not only economy and employment, now we’re beginning to see how video piracy has started impacting licensing too, which stands as the backbone of the digital industry, and is arguably a more damaging strategic issue than any other. Say simply, why would the potential distributors invest a high amount of money for rights when content is readily available for free on pirate sites? Why would rights owners sell to a distributor who has the potential of damaging their international sales?

A recent study from the US Chamber of Commerce’s Global Innovation Policy Center identified that movie piracy costs the US TV and film industry at least an estimated $29.2 billion dollars and as much as $71 billion annually.

Pirated videos now get more than 230 billion views every year, with the majority coming outside from the US. The highest demand is for pirated TV episodes with over 12.8 billion views in the U.S. and 170.6 billion views outside. There are 26.6 billion illegal online viewings of U.S. produced movies and 126.7 billion viewings of American TV shows annually.

Torrent search engines like PirateBay have a wide portfolio of pirated content from Netflix and other streaming platforms and then serves it to approx 59 million pirates online. Similarly, there are numerous other illegal video streaming sites continuously contributing to OTT video piracy, every single day.

An “OTT streaming revenue insights”  estimated that video piracy is expected to hit $9.1 billion of revenue in 2019 with the loss set to grow by 38% to $12.5 billion by 2022.

Parks Associates estimated that revenue lost to video pirate operations could exceed $61 billion in 2020 and $67 billion worldwide by 2023. The report says that if 10% of paid TV subscribers canceled pay-TV services due to video delivered by pirates, the loss could reach up to $6 billion by 2023 for those operators. A Parks survey of U.S. broadband households also showed that 5% of people used someone else’s credentials to get access to paid TV service, and 6% did so to access an online video service.

How To Stop Video Piracy?

Data has regularly shown that users who often pirate content are often the biggest buyer of legit content. There is a strong correlation between providing viewers with content that they want to watch (with a good streaming experience at a reasonable price) and a reduction in piracy.

Another way to curb video piracy is to make it much easier for users to access the content on their SVOD, TVOD, or AVOD platform.  A lot of users might opt for a better user experience even though they have to pay a premium price for it. Platforms like Netflix personalized content suggestions based on their choices and makes it simple for users to find shows they might like.

Let’s just explore a few more action you can take in order to stop video piracy on your website:

Block Credential Sharing

As discussed before credential sharing is one of the major causes of video piracy, users often share passwords to their accounts with each other. This results in several simultaneous logins from an account, leading to consumption of the same premium content several times which leads to a loss in revenue that you could have gained from those views

-For CMS like WordPress Websites

If your website is based on WordPress you can easily stop credential sharing by using several plugins available. Using this you can restrict the number of users accessing an account at a time. You can use the word press plugin to block simultaneous logins.

By using this plugin, you can ensure that at a time users can only log in from a single device, ultimately stopping the account from being accessed by multiple users at the same time. Also, make sure you have best managed WordPress hosting to avoid any other obstacles in ensuring security.

-For Non-WordPress Websites

In case your website is not based on WordPress you can still restrict concurrent logins. This can be done by allocating a unique ID which is allocated every time a user logs in. Every time a unique ID is active for an account, no other ID is generated and the previous ID cannot be used to log in to the platform.

Using SSO for login

Using a Single sign-on for login to the user account has proven to be effective to stop credential sharing. A user can log in to the platform using social logins such as Google, Facebook, etc.

Even though a user might share their login for the video platform easily but a Facebook or Google password is more personal and the user would refrain from sharing it with their friends. Also, since its SSO is user-friendly and it saves trouble such as remembering passwords and login is much simpler with just a click it makes sense to promote this feature to the user.

Restrict Video Playback

Another way to make sure that the account is not shared by the users is to restrict total watch time for a user. Typically a user won’t watch a lecture twice or thrice, depending on your user’s behavior you can keep a total playback time for a video restricted.

This way you can ensure that your video is not being watched multiple times by several users. For a more technical explanation on this, you can refer to the video linked to restricting watch time, also, in case you need code for this you can get it here.

Using Video Encryption

Video encryption is used to secure your videos by encrypting or hiding them from anyone you haven’t given access to. Basically, it stops anyone from viewing the video without your permission(the encryption key).

At present there are two major popular and easy to use encrypted video streaming protocols:

• AES 128 Encryption (Normal or Sample AES 128 protocol)
• HLS Encryption with AES-128

The flaw in common video encryption technologies – Even though these encryption by themselves are decently strong and cannot be cracked by brute force but they have a major flaw, that is the fact that their keys are exposed and can be accessed by any hacker or a tool/extension with some effort. Hackers can use the key to easily decrypt and download the video

Since the major flaw in the encryption technology is the open key exchange, it makes sense only to use a technology that can fix this. This is where DRM comes in.

Using DRM Encryption Technology

DRM(Digital Rights Management) works alongside the HLS, DASH, and RTMP encryption to make the video more secure by making it impossible to find the encryption key. DRM effectively removes any flaws in the video encryption to ensure that the video is not downloadable.

Major DRM being used in the market to stop video piracy are:

1. Google’s Widevine DRM
2. Apple’s Fairplay DRM

In order to ensure video protection, DRM is often used along with Watermarking to track any pirated content.

Using Watermarking

Watermarking involves embedding digital information in a video signal to identify its source of origin. It aims to identify the redistribution source of illegal streaming services. All content is marked, or tattooed, with a unique identifier that can be extracted in case of piracy in order to find the original source.

Domain Restrictions

Another way to ensure video protection is to make sure that your videos are domain restriction. This enables you to limit your video embed codes to play and load only on your domain. This prevents copying of embed code and its use by hackers to view the video on their domain

Choosing A Secure Video Hosting Service

In case you don’t have much idea using the above-mentioned video protection technology, you can always fall back on a 3rd party secure video hosting service.

These hosting platforms take care of all the tech parts related to secure video and stream seamlessly on the client-side. All you need to do is upload the video on the platform, and use the embed code on your website.

A good video hosting platform has a few prerequisites that you need to check while choosing any such service.

• Security– A DRM based encryption to protect your content
• Video API– to manage videos, to enable automatic video upload, and get OTP for playback
• CDN-to ensure speedy content delivery to the user regardless of their geographic location
• Video Analytics – Insights into how your content is consumed by your users and also help you flag any unlikely events.

How VdoCipher Helps In Stopping Video Piracy?

At present, there are several platforms that provide video protection. But their offering is limited to video encryption without any video DRM technology. This exposes the key, which an informed user can easily identify and use to access the video. A lot of our current customers have faced such issues before finally sticking to our video security solution. This is where Vdocipher comes in, we ensure the highest security for our clients from video piracy. We do this by providing Hollywood grade DRM encryption and our dynamic watermarking technology. Find out more about on how to prevent video download on the blog linked.

• Encrypted DRM Video Streaming – With Vdocipher’s Hollywood grade DRM technology, no one can download your videos using a plugin or any hacks.
• Dynamic Watermarking – You can watermark the Ip address, user id, email id, phone no, logo, text overlay to identify the source of the piracy. You can even customize the watermark in terms of its opacity, color, speed, and size as well.
• Server To Player Package – With Vdocipher you not only get video protection but we also provide -Amazon AWS for Servers, CDN, Transcoding, Analytics, API, Dashboard, Plugins, Custom workflows. All these features further add to the security and make it easy to control your videos.
• Smart Online Video Player – With our customizable online video player, you can give access to popular features such as subtitles, speed change, forward rewind options to your users. In case you provide an android app, you can also give an option to keep those videos for offline use without worrying about piracy.
• Screen Capture Blocking in  Mobile Apps – VdoCipher mobile SDK integration default includes screen capture protection in both Android & IOS Apps. Screen capture protection in common browsers like Chrome, and Firefox on the desktop is not possible.

How Netflix is Tackling Piracy related to Account Sharing?

Last year, Netflix announced that they would start making users pay an extra fee to share their Netflix account with someone living outside the household. This account-sharing crackdown is supposed to be rolled out globally by the end of March. 

According to Netflix, about 100 million households use shared accounts. Cracking down on password sharing might prove to be a good opportunity for their revenue growth. 

How will Netflix stop you from sharing your password?

Going forward, Netfile will ask their users to verify their identity through a code sent to the account holder’s email or text message, or by logging in with a recognized device. If a user is unable to verify their identity, they will have to either create a new sub-account by paying a small fee to add users. 

In order to use a device not part of the account owner’s household a user will need to enter a verification code, sent to the primary email or phone number linked to the account. You’ll have to enter the code within 15 minutes in order to gain access to the account. Netflix will use, the IP address, and device ID in order to determine if the device is part of the household.

FAQs

How software piracy can be controlled?

The strategies to mitigate software piracy include, Use of multi-DRM download system, Employing Antipiracy Software, Implementing Obfuscation, Tamper-Proof Software, Software Watermarking, Copyrights, Patents, and End User Agreements, Providing Demo or Trial Versions, Promoting Antipiracy Incentives.

How can piracy be prevented in regard to data and information?

Here are some of the key approaches identified from different sources, Affordable Access to Content, Public Relations and Education, Barriers to Entry for Pirates, Active Monitoring and Legal Action, Consumer Responsibility, Industry Cooperation, Innovative Use of Technology.

How does piracy affect the film industry?

The financial toll of piracy on the U.S. economy is nearly $30 billion annually, with pirated videos viewed over 200 billion times in 2018 alone. This loss translates into up to 560,000 industry job losses each year, affecting not just direct stakeholders like filmmakers and distributors but also ancillary businesses and services associated with film production​​. The ripple effects of piracy extend beyond immediate financial damage, posing a threat to creativity by reducing investment in new and innovative projects. Independent films and smaller projects, which often rely on box office returns and legitimate sales for success, are disproportionately affected.

Data sources:

https://www.akamai.com/us/en/multimedia/documents/white-paper/inside-the-world-of-video-pirates.pdf 

https://www.forbes.com/sites/niallmccarthy/2019/06/26/pirated-video-gets-viewed-over-200-billion-times-a-year-infographic/#75f4b25a2bcf

https://www.ncta.com/whats-new/how-much-is-digital-video-piracy-costing-the-us-economy

https://www.theglobalipcenter.com/wp-content/uploads/2019/06/Digital-Video-Piracy.pdf

Subodh

Product Marketing Specialist, VdoCipher.

www.vdocipher.com

The post 12 Video Piracy Statistics, 6 Prevention Methods (2023) appeared first on VdoCipher Blog.

AVCHi-Mobile (H.264 High Profile) and VP9 Codecs

Essentially the difference between baseline, main and high profiles of H.264 encoding is increasing compression efficiency, with the requirement of greater decoding capability. This means that compression in high profile reduces video bitrate for a given stream quality more efficiently, but decoding it requires greater processor power.

OTT Video Platforms such as Netflix encode their streams for delivery across multiple devices. There are multiple considerations when encoding for multiple-device streaming delivery:

• User internet bandwidth – The stream should be supported across the widest network bandwidth available. Encoding for low bitrate streaming is critical for users on low bandwidth internet connections, for example users who might be streaming on mobile internet connections.
• Processor capability – Devices such as OTT Television and Desktops have much more processing power than mobiles. Mobiles have much lower decode capabilities, because of battery considerations and because low-screen size means that streaming is already optimized for low resolution for mobile. However increasingly decode capabilities are increasing in mobile devices, and increasing demand on low-bandwidth connections requires this increased decode capability for more effective video encoding.
• Cost considerations – Streaming at high bitrates naturally entails higher costs for video content broadcasters. There is a trade-off there between video quality and cost. Video delivery providers therefore provide the optimal resolution for a comfortable experience.

Netflix’s latest update prioritizes video quality for low bandwidth internet connections. Prior to the update Netflix used AVCMain (H.264/AVC) profile for almost all video, and HEVC for videos in Ultra HD resolution. You can read more about SD vs HD in this blog. The two new compression formats that have been introduced are: AVCHi – Mobile and VP9-Mobile.

Optimizations

In terms of optimizing video encoding, Netflix have made the following changes:

• Increasing time period between random access points – This makes encoding more efficient, while increasing the time between I-frames, making seeking videos more granular.
• Allowing more B-frames, and better motion prediction, to reduce the number of heavy I-frames

Per-chunk Optimization

The feature of per-chunk video optimization allows encoding at different average bandwidths for different chunks of video. This is in place of an average bitrate for the entire video. This feature ensures that motion-heavy chunks are encoded at high bitrate as compared to low-motion chunks, ensuring smooth quality of video throughout the streaming process.

Conclusion

Netflix have updated to H.264 High Profile and VP9 codecs largely to maximize their reach to more number of users for reliable streaming. This update has come shortly after announcement of download feature for their mobile app. Additional optimization related to placement of I-frames and optimization of motion signify that the company is leveraging improving decoder capabilities for more efficient encoding. The resulting encoding efficiency improvements signify that AVCHi-Mobile encodes at 15-19% lower bitrates than similar quality AVCMain, while VP9 offers the same quality at 35% lower bitrate. The resulting improved quality for lower bitrate means a better experience for Netflix users.

Do give a read on history of Netflix to know all about how the company was founded and all the challenges it had to go through before becoming one of the streaming giants. If you want to know more about, what is transcoding, you can visit the blog linked.

Here are some other interesting blog related to Netflix:

• Netflix DRM
• Netflix Business Model
• Netflix Password Sharing Crackdown

For a free trial of premium secure video hosting similar to Netflix, check out VdoCipher.

Siddhant Jain

CEO, VdoCipher. Writes about video tech, ed tech and media tech.

www.vdocipher.com/

The post Tech Update: Netflix Updates Codecs Use for Efficient Encoding appeared first on VdoCipher Blog.

The need of Video Security for Netflix

Netflix is one of the most popular OTT/Video on Demand platforms. It serves thousands of premium movies and web series across the world. There is a lot at stake when topmost Hollywood and other global movie production houses are streaming and relying on the Netflix DRM Encryption. Its mechanism needs to provide highly secure streaming which should also provide a good viewer experience.

So primarily these are three reasons Netflix needs Video DRM for-

1. Secure their video revenues by preventing/restricting online video piracy. Illegal downloads & Screen capture are the most common methods of piracy.
2. Protect the Copyright of movie producers on the content. Any form of video piracy also violates copyright acts and is a brand loss for the content producer.
3. Increase the number of subscribers by restricting piracy. Suppose a viewer was intending to buy a Netflix subscription to watch his favourite upcoming movies. But then viewer searches on Google and finds copies of the premium content on the internet, this may prevent them from buying a subscription. Thus, security from video piracy is also needed for any OTT platform like Netflix to continuously increase revenues.

What is Video DRM?

The word DRM stands for Digital Rights Management. As the full form suggests, it is about managing and securing the rights of the content. Coming to the video, Video DRM generally means certain key video streaming security protocols maintained by likes of Google and Apple to prevent illegal video downloads in browsers and mobile apps. Two widely adopted DRMs are Google Widevine and Apple Fairplay DRM. We will explore more about DRM and how it helps Netflix in the below sections.

What happens when content is non-encrypted?

As in the case of youtube free videos, where the content is not at all encrypted; this allows browser plugins/extensions/hacks to easily grab youtube content and illegally download the raw file. There are many other platforms that similarly do not encrypt the content and there are hundreds of free plugins, extensions or websites to download such videos.

It is to be noted that same is not the case with the youtube pay per view movie platform. It does use video DRM encryption.

That is why the need for Video DRM came.

Happenings when content is encrypted?

The most common form of open-source encryption technologies are HLS encryption, AES encryption and RTMP encryption. While these technologies are one level more secure than Youtube, but the key exchange mechanism in these streaming technologies is not 100% hidden/blackboxed and thus ultimately hackers or software are able to grab the encryption key. Once a hacking tool gets the encryption key, it can combine the revealed key with the encrypted content to get the raw file back. Thus, these technologies are not totally secure.

What happens when content is DRM encrypted?

Adding DRM encryption to videos means, adding an encryption layer based on protocols of Google Widevine DRM and Apple Fairplay DRM. These DRM protocols are not open source. Since Google and Apple have browser/OS/hardware level control over the video playback in most devices, they are able to provide a blackboxed mechanism to secure the key exchange. In technical terms, this blackboxed mechanism is called a Content Decryption Module or CDM.

Examples –

• In Google Chrome and the Android app, Google Widevine DRM can secure the encryption keys.
• In Mac/IOS Safari and iOs app, Apple Fairplay DRM can secure the encryption key.
• Firefox and Edge on Desktop and Android, Google has partnered with the browser owners to implement Google Widevine DRM.

A detailed compatibility chart of these DRMs is included here.

Note – Implementing Google Widevine DRM and Apple Fairplay DRM requires licensing partnership with Google and Apple and maintaining a secure playback infrastructure in compliance with these DRMs.

Other Security Features of Video DRM

1. Prevention of illegal downloads and option for offline secure download in apps – In all the cases where video DRM based playback is happening, illegal video download is prevented. In the case of mobile apps, secure download and offline playback restricted inside the app is possible. DRM also allows giving a single time validity to these offline playbacks, setting them to expire after a certain period of time. (e.g 1 day/1 month/1 year)
2. Screen capture block in mobile apps and certain browsers – In certain cases like iOS apps, ios/mac Safari, and Android apps in many devices (Widevine L1 devices, not all devices), DRM can also totally block screen capture. In the case of android apps, in devices where DRM is not able to block screen capture (L3 devices), there are other methods to block screen capture. Those other methods are already implemented by Netflix DRM encryption mechanism and also by VdoCipher.
3. Serving different video quality based on HDMI security levels – While most video platforms across the world like to serve the highest quality (whether it is 1080p or 4k) to all devices and browsers. But for certain premium movies, mostly coming from Hollywood, there are restrictions on where all full HD can play or not based on the HDMI security level in that device/browser. E.g I know for a fact that most famous Indian movie platforms do not implement these quality-based restrictions.

Other Security features apart from DRM used by Netflix

1. Viewer based(dynamic) watermarking – Netflix DRM encryption mechanism and many other premium video platforms use viewer based watermarking. There are 2 kinds of viewer based watermark – visible or invisible. Many viewers might have seen the example of dynamic watermarking while watching some popular series/movie or especially live sports channel. There is a string with text and numbers that keeps floating over the screen. That watermark is a unique identifier to your device. Some platforms tend to keep this dynamic watermark visible so that it also discourages viewers from screen capturing and sharing their content. But some other platforms use invisible watermarks to not alter the viewer experience but detect the pirate user in case they come across any distributed pirated content. VdoCipher provides a visible form of dynamic watermarking.
2. Preventing rooted devices from playback – While rooting and trying to decipher Apple Fairplay DRM is very very difficult, some hackers attempt to break Widevine DRM in Android apps by rooting devices. Implementation of Safetynet, which is a Google app protection mechanism disables playback in rooted devices.
3. Restricting playback in multiple devices based on plan – If you look at Netflix plans in the below screenshot, you will see that the number of devices which can play videos from the same account is limited.
   
4. Geo Restriction – Geo restriction is more of a form of restriction rather than security from piracy. Movie content comes with a set of distribution rights. For a certain movie, Netflix can have rights to stream only in the USA, while for other movies Netflix may have rights to stream it anywhere outside the USA. These rights depend on agreements with content producers. Geo restriction ensures that these agreements are adhered to.

How does Netflix DRM prevent Screen Recording?

This is done with the help of EME or Encrypted Media Extensions which is a W3C specification for establishing a communication channel. This channel help web browsers communicate with DRM’s black boxed mechanism via Content Decryption Module (CDM) software.

This happens in Safari browser , android app and ios app.

Basically, for screen capture, a web browser communicates with the Video Player having EME which invokes DRM. Whenever a screenshot command is passed, it gets overridden via DRM secure playback and hence you get black screenshots or recordings. This mechanism combines the power of EME using HTML5 players to invoke the underlying DRM encryption.

Netflix and VdoCipher both use the same implementation for Screen Recording and Screenshots protection.

Netflix’s role in improving the DRM ecosystem across the internet

Since most of the population viewing online entertainment or course content are not themselves the platform owner, most of them are not in support of video DRM. While students feel that they are left out of free unlimited access to premium movies due to DRM, while on other hand some engineers are of the view that it is not right to have a blackbox (Content decryption module/CDM) in open web standard.

Browsers like Firefox who did not by default have DRM a few years back also had to implement it, else it would have led to a considerable loss of viewership to them.

Potential issues with video DRM

There is a very small % of devices which have compatibility issues with Widevine DRM in android and are unable to play DRM secured videos. Such device % is estimated to be in the range of 0.1 to 0.3% based on our experience at VdoCipher. Such cases occur mostly in Android and not in Apple/Windows devices. Some of these issues are owing to the fact that sometimes manufacturers like Realme, Huawei, and Xiaomi try to implement their own OS along with Android and make changes in the OS system which causes such issues. Some of such issues are resolved in device updates. E.g. This support article/tutorial of Netflix on handling one such DRM issue.

How can I as a movie/course platform implement Video DRM with ease?

Earlier, DRM was mostly within the reach of large enterprises like Netflix, and Amazon because of the complexity of integration and the time it took for integration. This problem is addressed by VdoCipher – a video DRM + video hosting solutions provider which combines multi-device video playback & player with a robust Google and Apple Video DRM. The unique proposition of VdoCipher is that the integration effort required by the customer is minimal and even a single person owned website can integrate DRM based video playback with ease using VdoCipher. From a single person owned website to popular media/e-learning platforms with millions of users; VdoCipher is built to serve everybody who is in dire need of video security.

What all do you get?

• Packaged cloud video hosting solution with Video DRM encryption
• Dynamic Watermarking
• Domain Restriction
• Smart Video Player
• Dashboard to manage videos
• Iframe, Plugin, API, SDK Integrations

If you want to read more on the  History of Netflix, do read the blog linked.

Here are some other interesting blog related to Netflix:

• Netflix Codec
• Netflix Business Model
• Netflix Password Sharing Crackdown

FAQs

How does Netflix Encryption block screenshots?

Netflix uses a technology called digital rights management (DRM) to encrypt its content and prevent unauthorized users from accessing it. When you take a screenshot of Netflix content, the DRM software prevents the screenshot from being saved or shared.

How does Netflix DRM work to protect its content piracy?

Netflix DRM uses a combination of encryption, licensing, dynamic key exchange mechanism, and access control to protect its content.

Is there a visible Netflix watermark?

No, there is no visible watermark in any content on Netflix but it is possible to have dynamic invisible watermarking with user info.

Vishal Sharma

My expertise focuses on DRM encryption, CDN technologies, and streamlining marketing campaigns to drive engagement and growth. At VdoCipher, I’ve significantly enhanced digital experiences and contributed to in-depth technical discussions in the eLearning, Media, and Security sectors, showcasing a commitment to innovation and excellence in the digital landscape.

The post Netflix DRM: How & Why of Encrypted Video Security? 2023 appeared first on VdoCipher Blog.

Note: There is a difference between how video bandwidth consumption is represented in cloud-based architecture pricing and majorly followed generic Internet terminology. In this piece, we will focus on actual Bandwidth supported by generic Internet terminology and discuss the video-hosting bandwidth calculations in the last.

In 2017, videos accounted for two-thirds of global consumer internet traffic and continuing since then. The effect of videos on bandwidth is more pronounced because of Ultra-High-Definition (UHD), or 4K, video streaming. The bit rate for a 4K video is about 15 to 18 Mbps, more than double the HD video bitrate and nine times more than the SD video bit rate.

What is Video Bandwidth & its composition

In the context of video streaming, the amount of information or data per unit of time that a transmission medium like an internet connection can handle is Video Bandwidth. In simple words, Bandwidth is the maximum data-carrying capacity of a transmission medium and measured in bits per second(bps), Megabits per second(Mbps) or Gigabits per second(Gbps). So, for example, if the bandwidth is 50 Mbps, a maximum of 50 Mb data can be transferred per second on the channel.

High bandwidth capabilities mean you will be able to achieve higher data transfer speed, download and upload files faster and stream HD content. In addition, having a higher bandwidth has several advantages like allowing more simultaneous visitors to your website, faster application performance and support for multiple concurrent sessions.

Bandwidth capabilities largely depend on the plans and provider you have and how you access the Internet. Also, video bandwidth requirement varies with the type of activity undertaken. For example, uploading small text files and sending emails requires low bandwidth, while streaming HD video needs a bit more to run smoothly. Nevertheless, certain metrics are essential in understanding the importance of video bandwidth.

Important Metrics related to Bandwidth

Bitrate – It is the amount of data transmitted over a network during a given period of time. If the bandwidth is 50 Mbps, but the bitrate is 20 Mbps, a maximum of 50 Mb data can be transferred, but the channel is transmitting only 20 Mb per second. Bitrate corresponds to the video quality and file size. Streaming at higher bitrates yields higher quality streams but at the same time consumes a large chunk of bandwidth.

Frame Rate – The frequency at which consecutive images are projected to give the illusion of motion in a video. High-speed streaming, especially sports, require shooting video at a higher frame rate. Video bandwidth and frame are directly related. The higher the frame rate, the more bandwidth consumption.

Video Resolution – Video resolution is the measurement of a video’s width by height in pixels. The more pixels, the higher the video quality. High-resolution videos have large file sizes, which means they require more bandwidth.

Compression – Uncompressed videos take up a lot of space. An uncompressed HD video footage nearly takes up 10 GB of space per minute of video and maybe varied with the frame rate. Video compression converts large raw video streams into smaller video files to reduce the size of the file. As a result, compressed videos require lower transmission bandwidth.

Video Bandwidth Vs Internet Speed

It’s very easy to get confused between Internet speed and bandwidth. The internet speed number, say, 5 Mbps your Internet Service Provider (ISP) gives, is not always related to how fast your Internet works. Bandwidth is the amount of data that can be download or uploaded from your computer, while Internet speed is how fast that data can be uploaded or downloaded. Many ISP’s allow different bandwidth limits for uploading and downloading. Usually, the upload bandwidth is lower than the download bandwidth.

There are often situations when your internet connection works too slow, even when you have higher bandwidth. Your internet speed could be less than or even match the bandwidth based on various factors. For instance, you have 30 Mbps broadband, but due to the incapacity of the router or copper lines, you usually get 20 Mbps. In addition, factors like infrastructure capacity, the number of subscribers connected to the ISP, router, crappy DNS servers can slow down the ultimate throughput of the connection at your end.

Bandwidth Vs Latency

Latency is often referred to as ping rate or delays or buffering. Latency measures the amount of time between the moment a data packet is sent and the moment it gets received and processed. On the other hand, Bandwidth is the amount of information transmitted per second. Higher bandwidth connections have increased download speed, and hence latency becomes much more noticeable. For example, a file may only take 5 milliseconds to download, but latency may cause the user to wait for nearly 100 milliseconds to receive the first byte of the data from the download request. Bandwidth is a significant factor in both video and audio streaming. If the bandwidth remains low, driving down latency may not deliver improved performance. On the other hand, if the network suffers from high latency connections, no bandwidth will help in data transfer.

Bandwidth Vs Throughput

Throughput measures how much information or data actually gets delivered in a certain amount of time, taking latency, packet loss, jitter, network speed and other factors into account. So, bandwidth is the maximum data transfer capacity of a network, and throughput is how much data makes it to its destination successfully. To have high-performance of the network, data packets must reach their destination successfully. Otherwise, there will be service delays even with a substantial amount of bandwidth available.

How much bandwidth does streaming use?

Streaming, gaming and other online activities on multiple devices simultaneously require more bandwidth to keep up. Therefore, the more bandwidth your internet provider delivers, the faster is the online experience. The FCC provides Mbps requirements based on digital activities, and the below table includes recommended bandwidth requirements for watching videos, video conferencing, gaming, and more.

Minimum Bandwidth required for HD, FHD (Full HD) and UHD (Ultra HD) video streaming

Data Usage required for HD (720p), FHD (1080p) and UHD (2160p) video streaming

The data usage required for HD, FHD (Full HD), and UHD (Ultra HD) video content streaming depends on various factors. It includes codec (e.g., H.264, H.265, VP9), bitrate, frame rate, and compression efficiency. However, the below figures are often cited for video streaming services.

Note: The above figures can vary. For example, H.265 (HEVC) is more efficient than H.264. It can deliver similar video quality at about half the bitrate. Moreover, the actual bitrate can change dynamically based on your network conditions if you use adaptive bitrate streaming.

1080p Streaming required Bandwidth & Internet Speed

1080p streaming videos are at a display resolution of 1920X1080, and it offers full HD video content on the Internet. These videos have more clarity and resolution than an HD video at 720p. Also, 1080p video consumes more amounts of data compared to SD and HD streaming. As stated in the above table and with the H264 codec, the recommended bandwidth is 6 Mbps, and with the H265 codec, it usually requires up to 3 Mbps.

4K and 8K Streaming Bandwidth requirement / Internet Speed

4K videos with a display resolution of 4096p x 2160p offer the most life-like video content on the Internet. These high definition videos have more visual information than ever about the texture, colour, shapes than an HD video. Unfortunately, 4k consumes enormous amounts of data compared to SD, HD & FHD streaming. With the H264 codec, the recommended bandwidth is 32 Mbps, and with the H265 codec, it could be up to 15 Mbps. To stream 4K HDR content, one needs a 4K UHD TV with HEVC decoder and HDR support. You can read more about SD vs HD in this blog.

Even with an 8K streaming service, most people wouldn’t be able to use it. Platforms like Netflix specifies a 25 Mbps stream for 4K content. This requirement seems to quadruple as there is no H.266 standard alongside 8K to reduce the file size. Netflix consumes 3.1GB/hour at 1080p for 60fps video and even 7GB/hour at 4K. If we assume that the transition from 4K to 8K consumes an equivalent amount of bandwidth to 1080p – 4K transition, the per hour bandwidth requirement to stream 8K content would be nearly 6.44GB – 19.2GB/hour for 23.976fps content. This is still a high bandwidth rate to burn out.

Netflix & YouTube Video Bandwidth requirements

The bandwidth required to stream Netflix depends on the video quality. The recommended download bandwidth for movies and TV shows on Netflix is 1.5 Mbps, 0.5 Mbps being the minimum threshold. 0.5 Mbps is just enough to start a video stream, but anything below 1.5 Mbps leads to poor video quality. As recommended by Netflix, Standard definition (SD) requires 3 Mbps, High definition (HD) 5 Mbps and 4K/Ultra HD at least 25 Mbps. You can set video quality settings to ‘Medium’ or ‘Low’ to manage Netflix bandwidth usage to use less data while streaming. According to real-world tests, in terms of per hour watching, Netflix’s actual bandwidth requirement at 1080p with 23.976fps video ranges from 1.9GB – 2.55GB and 3.5GB – 7GB for 4K.

While watching YouTube videos on smartphones, smart TV or laptop, the bandwidth requirement remains the same. The below table shows the approximate bandwidth required to play each video format without buffering or jitters.

Ideal Internet speed & Bandwidth required for Live Streaming

The recommended internet speed for a 480p live streaming should be at least 3 Mbps. The minimum download bandwidth varies between streaming services. A higher bandwidth may be needed when multiple devices connect to the Internet at the same time. For example, to live stream 720p or 1080p, you will need at least 5 Mbps bandwidth. For seamless 4K streaming, the minimum limit is around 25 Mbps.

Recommended bandwidth for Gaming and Online usage

According to the Federal Communications Commission (FCC), gaming consoles connected to the Internet require a bandwidth of 3 Mbps. At the same time, online multiplayer games, like Call of Duty, need a bandwidth of 4 Mbps. However, as online games are evolving rapidly, FCC looks a little behind the times. Although the best gaming sessions, on average, require 3 Mbps of bandwidth speed, this varies with the number of players involved in each session. Gaming on a PC or MAC involves a minimum of 3 Mbps download speed and 1 Mbps to upload. The Xbox Series X quotes 10 Mbps as the preferred bandwidth.

Calculation of Video Bandwidth & pricing via Video Hosting Provider

Video Hosting providers take the bandwidth consumption on a data usage basis. E..g  If a 1 GB video is played 10 times a day, then bandwidth consumed would be 1*10 = 10 GB.

At Vdocipher, different plans have different bandwidth options and the pricing for bandwidth can vary from $0.08/GB to $0.20/GB based on exact plan purchased. You can browse for more bandwidth plans on our pricing page and choose the plan as per your requirements. Also, if you are looking for an enterprise solution with bulk purchase, the bandwidth pricing can be further reduced.

FAQs:

How bitrate affects video quality?

A higher bitrate means a larger amount of video data bits uploaded per second. High bitrate increases video quality and file size. Conversely, lower bitrate results in smaller file size, low video quality and fast export time.

How to reduce bandwidth usage?

Malware scanning, use hosted filtering, limit VoIP use, identify bandwidth hogs, using proxy cache are some of the ways to limit bandwidth usage.

Does Netflix consume more bandwidth than YouTube?

Netflix uses around 1GB of data per hour for SD, up to 3GB for HD and about 7GB for 4K Ultra HD video. YouTube bandwidth usage is less compared to Netflix. A 480p SD video on average consumes 563MB of data per hour.

What are the ways to reduce latency?

Latency can be reduced by using a wired connection, network reboot, firewalls disabled. Check for faulty hardware and close unnecessary bandwidth-consuming applications.

Vishal Sharma

My expertise focuses on DRM encryption, CDN technologies, and streamlining marketing campaigns to drive engagement and growth. At VdoCipher, I’ve significantly enhanced digital experiences and contributed to in-depth technical discussions in the eLearning, Media, and Security sectors, showcasing a commitment to innovation and excellence in the digital landscape.

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