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.

It’s pretty clear how the world of streaming has been rapidly expanding its branches. There was a time when the entertainment industry was limited to cable TV. But as digital media underwent an intense evolution, streaming platforms have become the new favorite of TV series and movie lovers.

Every person who has watched even a single Netflix or Amazon Prime Video TV series or movie has realized how the entire entertainment ecosystem has transformed. Depending on the viewers’ taste there is a whole mountain of content widespread on the internet. Amazon Prime Video and Netflix are the two main giants that offer the majority of the world’s entertainment.

What Is Netflix?

Launched in 1997, Netflix brings forth an entire TV series and movie library through its original productions as well as distribution deals. It started out as a rental business based on mail and has emerged as the top OTT platform of the 21st century. Netflix started out small and has become an unbeatable rival to other Video-on-demand platforms in the current day scenario.

What Is Amazon Prime?

Just like Netflix, Amazon Prime Video is also a paid subscription service by the global giant Amazon. It has become widespread in many countries across the globe. Amazon introduced Prime membership as a service offering in 2005. It offers viewers the facility to instantly stream selected TV shows and movies without any additional price as long as they are Amazon Prime members. This is applicable to members from the United States, India, the United Kingdom, Germany, Canada, Italy, and Australia.

Amazon Prime vs Netflix: Comparing Plans and Pricing:

Amazon Prime: Plans & Pricing

Amazon Prime offers three plans: Prime Video, Prime (Monthly), and Prime (Annual). The Prime Video plan costs $8.99, Prime (Monthly) costs $14.99, and Prime (Annual) is $139. Amazon also offers a free trial of its Prime service for 30 days. Offline viewing is available on all three plans. However, you only consume content on one device at a time.

The price of Amazon Prime is $99/year. It also includes TV series on movies available for streaming even though not all. Some digital content like TV series, music, movies, and books are also available for rent. Some other perks of signing up for Amazon Prime include unlimited 2-day shipping for free, same-day shipping in some areas, one free kindle ebook per month, and more savings on Mom services.

Netflix: Plans & Pricing

Netflix offers three plans: Basic, Standard, and Premium. The Basic one costs $9.99, the Standard costs $15.49, and the Premium costs $19.99. Offline viewing is available on one device for the basic plan, 2 devices on the standard plan, and four devices on the premium plan.

Netflix also provides a service in which you can get a rental DVD via mail. For 2 DVDs it charges $4.99 per month. You can also get 3 a time unlimited Blu Ray discs for $19.99 per month.

If you are looking forward to making the most out of your subscription price, Amazon Prime can turn out to be better. If you are a video game buff, Amazon Prime Video would be even more beneficial, thanks to its perks such as free games, rewards, and so on. But of course, if the content you prefer is only available on Netflix, it’s a great choice too.

Amazon Prime vs Netflix: How Does The Content Library Compare?

If you talk about content, Netflix and Amazon Prime Video greatly diverge. While Netflix is better in terms of originality, Amazon Prime Video shines when it comes to offering more titles. While both are award-winning for the original movies and TV shows, there is still comparison criteria. Mostly, content preferences are highly relative with different watchers having different likes and dislikes.

Amazon Prime Content Library:

If you are looking for a modest yet versatile content catalog, Amazon Prime Video is the way to go. There is no shortage of different niches as Amazon Prime Video is a house to many popular TV shows and movies. One of the most influential appeals is a comprehensive catalog of rich and original content. However, you must keep in mind that if the movie or show of your choice doesn’t display the Prime banner, you might have to rent or purchase to watch it.

Some of the most popular Amazon exclusives include Six Feet Under, The Sopranos, 24, Veronica Mars, The Wire, and kids shows such as Go Diego, Go!, Dora the Explorer, and SpongeBob SquarePants from Nickelodeon.

The content library of Amazon Prime Video is the largest one any streaming service has offered. It has more than 17000 movies.

Netflix Content Library:

Netflix has a comparatively huge content catalog that focuses more on original content. The best part is that it features plenty of foreign content as well that is hard to find. It gained a lot of popularity after producing the new season of Arrested Development, a popular cult classic.

Netflix exclusives feature Mad Men Breaking Bad, Gossip Girl, The Walking Dead, Dexter, How I Met Your Mother, Grey’s Anatomy, Arrested Development, and Supernatural. It boasts critical acclaim winners such as Orange Is the New Black and House of Cards. Some other lovable masterpieces include Icarus, The Crown, The Irishman, Roma, Stranger Things, and Unbreakable Kimmy Schmidt.

The content library on Netflix has 100000 + titles. However, it doesn’t compare to Amazon Prime Video when it comes to movies as Netflix has less than 4000.

If you choose Netflix or Amazon Prime on the basis of content preferences, it’s important to research and realize the kind of content you actually like. One thing to note is that Netflix has a wide variety of children’s movies and shows as well which makes it a popular option for families. Children’s collection is a little limited on Amazon Prime Video.

Amazon Prime vs Netflix: User Interface and User Experience Comparison

Netflix features a highly optimized, sleek, and clean user interface whereas Amazon Prime Video has things more complicated in this area. This makes it easy for Netflix users to browse the platform on different devices. But since Amazon Prime Video is less integrated, overall navigation and browsing are a little bit more challenging. 

The fact Netflix is exclusively targeted at VOD might have something to do with a flawless user interface and user experience. As we already know, Amazon Prime Video offers entertainment as only one of its many services in its marketplace.

Amazon Prime vs Netflix: Video Streaming Quality Comparison

It goes without saying but for most users, video streaming quality is something they can never compromise on. That’s what makes it one of the most important features for comparison between Amazon Prime Video and Netflix.

Amazon Prime Video features HD quality by default. If you wish to crank the resolution up a notch, you can easily level up with 4K ultra HD. Unfortunately, that’s hardly the situation with Netflix. The Basic plan only offers SD quality with a cap at 480p. That means you can’t enjoy the visuals to their fullest. You can get HD quality only by updating to the Standard plan. The only way to avail 4K ultra HD is to purchase the Premium.

Amazon Prime vs Netflix: How Many Devices Can Stream Video Simultaneously

Before diving into how many devices can stream videos simultaneously, let’s check out the device compatibility of both Amazon Prime Video and Netflix.

Devices Compatible With Amazon Prime Video : 

Amazon Prime Video is compatible with the following devices.

• Amazon Fire TV
• Android TV
• Android devices
• Apple TV
• iOS devices
• Google Chromecast
• Nintendo
• Xbox 
• Smart TVs 
• Roku
• Web browsers

Devices Compatible With Netflix: 

Netflix is compatible with the following devices.

• Android devices
• Amazon Fire TV
• Apple TV
• iOS devices
• Google Chromecast
• Nintendo 
• PlayStation 
• Xbox 
• Nvidia Shield
• Roku
• Wii
• Smart TVs
• Web browsers

The option for streaming on multiple devices is one of the most sought-after features of OTT platforms. If you are a Netflix user, you are going to have to upgrade to the Standard plan if you want to stream your favorite TV shows in movies on multiple devices. In case you need streaming on more than two devices, only the premium plan offers that. However, Amazon Prime Video offers simultaneous streams for multiple devices in all its plans. As long as the content is different, you can stream it simultaneously on 3 devices. Whereas, for the same content, this limit is up to two devices.

Also, Netflix content streams smoothly on most Amazon devices whereas the same is not true for Amazon. Its interface is optimum for Amazon’s very own content but the lack of cross-device continuity is its disadvantage. However, the number of apps and channels available is beneficial for Amazon Prime Video users.

Comparing Revenue and Subscribers

Netflix has approximately 30 million subscribers and more than 7 million international subscribers whereas Amazon Prime has 10 million Plus subscribers. The annual net subscription services sale for Amazon Prime was dollar 25.21 billion in 2020. On the other hand, Netflix’s revenue was 30 billion in 2021. If this trend continues, both Netflix and Amazon Prime Video could wade the waters of trillions.

Amazon vs Netflix: Which One Is Right for You?

Netflix offers to set up individual profiles for all family members. Since every person in the house has a separate profile, Netflix offers personalization on the basis of their preferences. For instance, if you watch mystery thrillers, Netflix is going to offer other similar suggestions for viewing. It offers the watchlist and wishlist in clear vicinity when a user logs in.

If you are worried about the A-rated content on Netflix, you would be pleased to know that the front and menu can easily be locked. In other words, since Netflix has a separate profile for kids nothing inappropriate would be visible to them.

But if you have a versatile content preference, Amazon Prime can offer you more worth of your money spent. It offers X-ray, something that Netflix doesn’t have yet. This feature offers facts and trivia and information about actors, songs, and other details related to the TV show or a movie you’re watching. So, if you having some trouble placing a face, Amazon Prime Video allows you to instantly identify them. However, if simplicity of the user interface and specific quality content is your preference, Netflix would be the way to go. All in all, it’s going to come down to preferences and pricing.

Conclusion:

By now, it must be clear that if you compare factors like plans pricing, content library, user interface and experience, quality, revenue, and subscribers, it’s possible to make an informed decision for Amazon Prime vs Netflix.

Without a doubt, both Amazon Prime Video and Netflix are the two topmost Video-on-demand streaming platforms out there. Most people who are already a part of the ecosystem of Amazon, they already get the most popular TV series and movies for free as long as they are Prime members. If you are still confused, Amazon Prime Video offers a trial version lasting for 30 days. You can try it out, analyze your preferences, and compare it to Netflix.  If you have any queries, sound them off in the comments section below. Meanwhile, do check out our blog on Netflix history to know more about the origin story of NetFlix. 

Rahul Rana

Head of Digital Marketing at Vdocipher. I love the art of connecting the right product to their users. When i’m not doing that i love getting lost in books.

www.vdocipher.com/

The post Amazon Prime vs Netflix: Which Streaming Service is Right For You appeared first on VdoCipher Blog.

We will also see what advantages Disney Plus offers over Netflix in this regard? Where does Netflix excel above and beyond what Disney Plus has to offer? We will explain everything in detail and compare these two platforms on various criteria.

Comparing Plans and Pricing: Netflix vs. Disney Plus

Disney Plus wins the pricing rivalry among streaming services. Its basic package is just $8 per month and offers four simultaneous streams, 4K streaming, and IMAX capabilities. There are no other pricing tiers available. However, as part of the Disney Bundle, you can include Hulu and ESPN Plus with your membership to Disney Plus. 

When you sign up for the Disney Plus plan, you will get all three services for $14 per month.

On the other hand, regarding how much it costs, Netflix is now at the very top of the food chain. Although the site does not include any advertisements, the prices of all three subscription options have increased. The basic edition, which costs ten dollars, only allows one stream at a time and one device for downloading content. 

Netflix’s most popular premium option now costs $15.50 monthly. It includes support for two screens or devices simultaneously and HD quality. Also, Netflix’s premium plan costs an additional $20 per month but provides access to four simultaneous streams and 4K video.

Disney Plus Vs. Netflix: The Content Library

Comparing the features was relatively straightforward; however, this part is when things become more complicated. Netflix and Disney+ are two very distinct kinds of content platforms due to the basic structure of their respective services.

Most of the material available on Disney+ is, unsurprisingly, Disney-related as it does not have contracts with other studios.

However, this does not necessarily imply that only Disney films from the previous century are included. Remember that Disney owns many successful brands, such as Marvel and Star Wars. In addition, there is material that Pixar and National Geographic produced.

The repertoire of Disney Plus may be five times less than that of Disney streaming services. But it is pretty rich. Among its offerings are titles from Lucasfilm, Marvel, Pixar, and National Geographic from Disney and its subsidiaries. These titles cover a wide range of topics. From The Simpsons to Star Wars, they also include classics popular with children, such as The Jungle Book, Avatar, Avengers: Endgame, and Star Wars: The Force Awakens are three of the four most lucrative movies on Disney.

Star is a supplemental channel that offers “grown up” content from the back-catalogs of ABC, FOX, and 20th Century Fox. It includes the highly anticipated Dopesick, starring Michael Keaton and Rosario Dawson. Subscribers in Canada, New Zealand, Europe, and the UK also get access to Star.

On the other hand, material may be found on Netflix that various studios produced. You will discover television episodes and movies from almost every producer, except for Disney. And it should come as no surprise that Netflix has invested increasing money in producing its original content. After considering all these factors, one may argue that Netflix has a broader collection and more excellent options than Disney+.

Netflix can provide quality and quantity due to its enormous collection of over 6,000 films and television episodes. It has content five times as many as Disney Plus. It is most well-known for its original true-crime works, such as “The Jinx” and “Tiger King”.

In the end, there is a significant probability that you will decide based on the unique material on the apps. Disney Plus will be challenging to turn down for devoted Star Wars fans looking for their Skywalker dose. Fans of The Crown will be lured to Netflix. Because they can’t wait to catch up on the latest episodes.

Disney Plus vs. Netflix: User Interface and User Experience 

Netflix offers a user experience that is both easy and enjoyable to use. You won’t have any issue exploring, building a shortlist, or enjoying Netflix’s recommendations. They recommend shows based on browsing history, preferences, languages, and choices. You also can establish several user profiles. And there is also the option to install parental locks. Hence, it prevents users under 18 from inadvertently seeing more explicit material.

The user interface of Disney Plus is quite similar to that of Netflix. This makes the platform incredibly easy to go about inside the service. With channels like “Recommended for You” and “Originals, it is much easier to find something to watch that pique your interest. In addition, there is a valuable part entitled “HDR.” The Netflix app does not have a specific section for HDR content; thus, Disney has an advantage in this regard.

You can watch content on both apps even when the device is not connected to the internet. This makes it far less difficult to catch up on missed television episodes while traveling. Customers of Netflix can have up to 100 downloads at once. However, customers of the Disney Plus mobile app can download an “infinite amount” of titles at once. Although we have not conducted our tests on it, we are ready to take the company’s word that it is effective.

Disney Plus vs. Netflix: Video Streaming Quality Comparison

People are becoming more aware of the visual quality of the information they view since even the most affordable television sets are now equipped to display in high definition (HD). (Have you ever tried watching an old DVD on your new television? The contrast between the two may be shocking!)

When you stream material from Disney+, you will always get at least HD quality (which ranges from 720p to 1080p), and you will get up to 4K Ultra HD (2160p) for compatible content with that resolution. According to Disney’s advertising, there are over 100 titles that are available in 4K resolution.

The gadgets above are compatible with the system, except for the odd Windows device. The Disney Plus app may be downloaded and used on an almost unfathomable number of platforms. Additionally, up to four screens may stream content concurrently from a single account online with the more expensive Premium tier offered by Netflix and superior to the three-screen restriction imposed by Apple TV+ and Amazon Prime Video, respectively.

Netflix, on the other hand, is not strictly charitable. Only video in standard definition (SD), which has a maximum resolution of 480 pixels per second, is included in the Basic Netflix package. You will need to subscribe to the middle-tier plan of Netflix to watch content in high definition, and if you want to manage content in 4K resolution, you will need to upgrade to the premium plan, which costs $19.99 a month. You will probably be able to see the difference if you are viewing on a much bigger screen than a mobile phone.

The Netflix app is so widely used that some TV remote controllers even feature a button that is specifically designated for the Netflix app. The application may be downloaded onto personal computers and Macs, as well as Apple TV, Amazon Fire TV devices, Roku streamers, smart TVs, Sky Q, Xbox, PlayStation, and Blu-ray players. Additionally, it can be used on most tablets and smartphones (Android or iOS).

Disney Plus vs. Netflix: Devices Supported 

The number of devices that a streaming service allows you to stream content to simultaneously may significantly impact how you use the service. This is particularly important to consider if you have children who want to watch their favorite cartoon repeatedly.

Streaming content on Disney+ is made more accessible by the fact that it supports up to four devices at once. If you subscribe to Netflix’s most cheap Basic plan, you’ll only be allowed to watch content on a single machine simultaneously. You will get two streams after you upgrade to the $15.49 subscription, which is the mid-tier option. However, to access the same amount of streams as a Disney+ plan, you will need to purchase the Premium plan for $19.99.

Disney Plus vs Netflix: Revenue and Subscribers

Disney+ has already marched to 95 million global subscribers as of January 2. The streaming service’s unexpectedly explosive growth has drawn consistent comparisons to Netflix. But despite the former’s rapid surge in success, it still pales in comparison to the latter in many key categories. Disney+ is the hotshot rookie, and Netflix is the championship veteran.

Disney+ has enjoyed unprecedented quarterly gains in new subscribers ever since launching in November 2019. Initially, Disney acquired Hulu to be its generalist streaming service as the company positioned Disney+ as its specialist platform. A planned international rollout for Hulu has been scrapped, and the Mouse House has instead acquired services Hotstar and Star overseas.

Disney’s entire streaming operation is within spitting distance of Netflix’s 200 million global subscribers, but Disney+ is nearly halfway there on its own. Across its three streaming services, the firm has 146.4 million paying customers. However, Netflix maintains its advantage in the critically crucial Average Revenue Per User (ARPU) statistic.

Netflix’s most popular package runs users $13.99 per month, while Disney currently charges $6.99 per month but will increase its prices in March. That’s a 63% cost disparity, contributing to the gap in ARPU between the two titans. Netflix’s ARPU during the fourth quarter of 2020 was $10.80, according to Bloomberg, while Disney+’s sat at just $4.03, per LightShed Partners. Disney+’s ARPU has fallen every quarter since Q2 of last year. That trend is not what you would typically associate with a thriving business.

On paper, this seems like a catastrophe. However, the truth is that Disney is more concerned with increasing its global subscriber base to place its intellectual property (IP) in as many households throughout the globe as is humanly feasible. (During Disney’s December Investor Day, the company’s executives predicted that Disney+ would turn a profit by 2024.) As a component of this initiative, Disney is rapidly growing in India (long a growth goal of Netflix) via its Hotstar Disney brand. This brand currently accounts for thirty percent of Disney+ members and has an ARPU of around one dollar per Cross Screen Media.

The low-cost service that Hotstar provides is both the cause of Disney’s falling average revenue per user (ARPU) and the source of its rapid growth. Disney is, in effect, surrendering short-term money to establish a vast worldwide client base for Netflix, which will enable Netflix to produce far more income than its nearest streaming competitor. However, once Disney officials believe that their streaming product has reached a point of saturation, the company will begin to boost rates to narrow the gap with Netflix in terms of raw income.

Disney Plus vs. Netflix: The Winner

Due to the recent hike, Netflix has become expensive for people who don’t want to spend much on entertainment. Netflix is effortless, provides a diverse selection of first-run programming options, and is accessible from any device. Regarding the visual quality, you won’t be let down either since a wealth of material is accessible in a high dynamic range (HDR) and 4K resolution. 

However, Disney Plus is more straightforward to use than Netflix, is much cheaper than Netflix, and is attractive to children. If Disney Plus can establish itself as a viable contender just two years after its creation, then this sophisticated streaming service’s sky is the limit. So, Disney Plus is the winner here if you want entertainment on a budget. 

You can read more about Netflix in these blogs:

• Netflix Codec
• Netflix Password Sharing Crackdown
• Netflix History
• Netflix DRM

Rahul Rana

Head of Digital Marketing at Vdocipher. I love the art of connecting the right product to their users. When i’m not doing that i love getting lost in books.

www.vdocipher.com/

The post Disney vs Netflix: Which Streaming Service is Right for You 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.