In the 1950s, Television replaced radio and dominated the home entertainment media. Now cable TV is replaced by Netflix. The streaming service is creating disruption through technology with a single focus on audience base expansion at a continual pace.
Netflix success isn’t overnight. With the passage of time, they evolved from merely video selling via mail to streaming good quality and world’s top TV shows and movies.
In this blog post, we will dig out all the features, tech stack and costing you need to consider while thinking of ‘how to start a streaming service like Netflix’.
How Netflix became a $100 billion company? The success secret
Do you know Netflix is almost 24 years old?
It was founded in 1997 by Reed Hastings and Marc Randolph as Kibble – a DVD rental business and the only value proposition at that time was video mail-order. They consistently improved their services and now Netflix is the biggest TV and movie studio in the world. The Netflix network has the most subscribers than all of the cable TV channels in America.
From video rentals via mail to smart view suggestions based on algorithms to the original content creation is what makes them the pioneers in the streaming service selling.
It would be wrong to say that Netflix secret weapon is luck but the deep understanding of their audience segmentation.
“One of the biggest challenges that we had, which I think is also one of the things we did very well, is recognize very early on that if we were going to be successful, we had to come up with a premise for the company that was delivery agnostic. But if we were to come out and say, ‘This is all about downloading or streaming,’ and we said that in 1997 and ’98, that would have been equally disastrous. So we had to come up with a positioning which transcends the medium.” – Marc Randolph
Netflix success timeline (1997-2018)
1997 – video library, 900 titles 7-day rental
1999 – video library expands to 3100 titles, 50 cents rental, no return-by-dates
2000 – video library expands to 5200 titles, $19.95/ month
2002 – Files IPO (Initial Public Offering), valued $15
2000-3 – Increase in operational expenses, loss of $4.5M in 2002
2003-06 – recommendations using Cinematch ranking algorithm
2007 – Launched online streaming service – Watch Now, 1000 titles, $5.99/ month
2008 – Partnership with Starz network, 2500 movies and TV shows
2011 – Netflix for streaming, Qwikster for rentals (DVD rentals)
2013 – Debut House of Cards, high profile original production, user profiles introduced
2015 – 1st feature film ‘Beasts of No Nation’
2016 – Netflix got live in 130 countries, transition from American company to global media organization, 7million new subscribers, 54 Primetime Emmy Awards nominations for original programming (Amazon received just 16 nominations)
2017 – Subscribers surpasses US cable TV subscribers
2018 – 8.3million new subscribers (Stranger Things, Black Mirror, The Crown)
2019 – 167 million new subscribers, $20.1 billion revenue (Stranger things 3, The Umbrella Academy, The Witcher)
2020 – 203.7 new subscribers (Ozark, Stranger Things 3, The Umbrella Academy, Cobra Kai, Unsolved Mysteries)
2021 – 4 billion in first quarter (Sweet Tooth, High on the Hog, Sons of Sam, The Serpent)
Netflix value proposition – what makes them stand out in the market
Netflix has changed the way we used to watch TV by bringing technological innovations such as smart algorithms detecting the interests of the audience.
Original content production
Netflix decided to spend aroun 85% of their revenue on original content production in 2019. The investment was more than ever spent by its competitors like Amazon, Hulu, etc.
With other streaming services, there were ads popping up when Netflix actually started producing digital content. They pledged for ad-free streaming. No more annoying or irrelevant ads.
Too many options to watch
Based on view interest, Netflix recommend a range of movies, TV series and documentaries by different distribution partners.
Netflix does all the user intention research to offer the best possible content. Customer created preview videos are the best which play on scrolling through title cards. 30 days free subscription and Netflix account sharing.
By using machine learning, Netflix looks into the viewer choices. It knows what you watched and how many episodes. This ML enables Netflix make millions of decisions based on user activity.
Netflix placed whole season episodes at once in 2016 that’s where it disrupted the binge watching concept. People started watching the whole seasons in one go rather waiting for their favorite season’s upcoming episode.
How to start a streaming service like Netflix?
First thought which comes to everyone’s mind is that development is the core. However, there several equally important steps involved.
1-Strategize and find the market gap
Video streaming and on-demand is what you know but what type of shows you want on your website. The streaming services could be related to cooking only. Or stream service for particular age group as well like kids – a streaming service comprise of cartoons and TV shows.
Do pick your niche in the very start. Also, plan your content and see if it would be free or if there is a subscription model do you have a sufficient content and budget to produce? Set frequency i.e. daily, weekly or monthly update.
2-Licensing for the streaming
There are two ways of doing it, either contact the copyright company directly; else, rent a movie from the distributors for authorized access.
Do look into different types of licensing. You may get a licensing for one season only. This is convenient as well as if the season doesn’t perform you won’t be paying for the next. Moreover, some movies and seasons have exclusive distribution rights and you may not get the licensing. Also, you may not get licensing for content restricted for particular regions.
3-Consider the UI/UX
Are you planning for Netflix like user experience? Or want something of your own? There are templates somewhat like Netflix. Both ways have their own pros and cons. If you are inclined towards branding and software development companies can greatly help you.
4-Responsive/ Adaptive, Web or Mobile – preferences
For a website like Netflix, you should go opt mobile app as well along with web version. This means a mobile version could be a preferable medium for some users. Do think about responsiveness/ adaptive web version. This is not sufficient, a standalone mobile version gives more personalized experience.
5-Hire a reliable app development company
You can find such companies on Clutch, Upwork, The Manifest, Good Firms etc. Look into the reviews and see their previous portfolio, assess their skillset and tech stack. Get in touch with their clients and ask for the honest reviews.
6-Features and tech stack
Some of the common features you should consider are: vidoe creator, content admin, onboarding, user registration, social sign-in sign-off, search, user account, payment gateways, multi-language support, settings, push notifications, reviews, geo-restriction, admin panel, and analytics.
Web – NodeJS, C#, Mobile – Kotlin for Android, Swift for iOS, TV – LGTV: C#, React, Samsung TV: NodeJS, React
Development of streaming service is not enough you should have a comprehensive marketing strategy in place. Some of the advised activities from our end includes: SMM (Social Media Marketing), paid ads, SEO, influencer marketing, events and partnerships.
How Netflix is making money? A on-demand and subscription business model
Netflix is running on a subscription model for making money using 3 plans i.e. basic, standard and premium. Netflix and companies like Amazon, Google, Facebook and Microsoft greatly rely on technological advancments. A poor internet connection viewer won’t be convinced to buy a subscription for Netflix.
The on-demand businesses are running because of the speed of the internet on which it’s running today. Netflix uberization term is used which means it’s offering more than a viewer can consume. Netflix subscriber gets more flexibility, options, personalization of TV shows, series, etc. Previously, viewers were following rigid TV schedules for their favorite shows.
Netflix is using a mix of on-demand and subscription model. However, Subscription model required a lot of investment and patience. The streaming service didn’t get all successful in a short span rather look at the last 10 years struggle.
“We acquire, license and produce content, including original programming in order to offer our members unlimited viewing of TV shows and films – Netflix annual report
Customer acquisition cost (CAC) if lower than customer lifeline value (CLV) then your business is viable. Well, it’s easy to say than make it done.
In 2016, Netflix was able to reach Asia that is after 20 years.
Features of Netflix like service – basic, advance and technical
Basic – user registration, content search, chat and comments, user profile, push notifications, payment gateway, app settings, and offline download.
Advance – multiple language support, reviews and ratings, live streaming videos, block screenshots/screen-recorders, social sign-in sign-up, and geo-restriction.
Technical – admin panel, video content management system, content recommendation algorithm, out and out multi-screen compatibility, multi-modal social interaction, Lucid video distribution and syndication, media asset security and HD transcoding.
MVP for building Netflix like service
We do not recommend a full fledged netflix streaming app in the start because heavy backend databases are required for processing data.
Again, remember the total cost of the development relies on the number of features you ask for. More features you want, the more costly the app would be.
So, let’s go with the basic set of features which you cannot leave while developing a streaming app like Netflix.
1- User registration
Primary feature which cannot be ignored is user registration. We usually recommend our clients to go with email and social registration for the sake of user/viewer convenience.
Estimated time – 30 hours
User profile is another important feature where users can edit their names, upload photos, pick genres, actors, movies, directors etc.
Estimated time – 12 hours
3-Subscription plans / payment options
Once the user has completed the trial period, he will be provided with several subscription plans. Payment gateways could be PayPal, Stripe etc.
Estimated time – 70 hours
Every user has his own set of choices which he can search on the basis of TV shows, actors, reviews etc.
Estimated time – 15 hours
Set parameters when a user should get a notification like:
-User cancels the subscription
-New season/ new episode / movie of choice is on air
Estimated time – 1 day/ 24 hours
6-Reviews and ratings
A user can rate or review any show or movie he watched for a better experience.
Estimated time – 35 hours
7-Multi language options
The more languages your platform supports, the more user base you will have.
Estimated time – 10 hours
Play/pause, subtitles on/off, rewind, volume control, audio track selection etc.
Estimated time – 15 hours
9-Design/ User interface
Platform user interface or layouts and each designed screen.
Estimated time – roughly 100 hours
WBS – a complete features breakdown
Here’s a detailed ‘Work Breakdown Structure’ of all the possible features.
Like to develop features listed above, contact our business development team.
Netflix architecture (for better understanding)
Tech stack required for developing Netflix like service
Programming languages – Kotlin, Java (Android), Swift, Objective-C (iOS)
Toolkit – Android Studio, Android Developer Tools (Android), Apple Xcode (iOS)
SDK – Android SDK, iOS SDK, Cocoa Touch
Streaming protocols – RTMP, Adobe HTTP Dynamic Streaming, Apple HTTP Live Streaming, M2TS, MPEG-DASH, Microsoft Smooth Streaming, WebRTC, RTSP/RTP
Media formats – MKV, MP4, AVCHD, AVI, DMW, MOV, FLV, WMV, SWF
Cloud services – AWS
How much does it cost to build an app like Netflix?
An average cost of streaming app like Netflix is estimated at $60,000 – 80,000 for single app with basic set of features. It takes on average 6-8 months in development process.
Do you know that the video streaming service industry is estimated at $50 billion? And in 2027, the market ratio would reach 184 billion in revenue. The COVID-19 pandemic boosted the popularity of video streaming services. Overall, the industry rose by around 10%. Netflix registered a 50% growth in first-time installations in March 2020. Grandviewresearch, 2020
Netflix success story lies with their business strategy. Now you get a clear picture of how to start a streaming service. Indeed a complex process with several steps involved. When you decide building a Netflix-like service you have to look into development process, licensing content from distribution companies/content producers, marketing campaigns and more. Not any more.
Schedule a call with our experts who have an experience in building multi-billion dollar solutions.
Get a custom estimate on a streaming service like Netflix. Book a call or contact us.