Technology has revolutionized the way things were being done in the past. Today, we are doing the same old school stuff, but through an improved and more penetrating media- The Internet. Broadcasting was a sphere traditionally dominated by the Cable TV and direct to home TV services. However, now it has stretched to a broader audience through live streaming and video-on-demand services.
Any discussion about VOD services cannot close without talking about how Netflix has emerged as an unprecedented supplier of videos from a number of niches. Started with broadcasting popular Hollywood movies and re-broadcasting TV episodes, Netflix ultimately becomes an original content producer and given mankind the awesome content like “Stranger Things” “House of Cards”, “Narcos” and recently the very popular “Mowgli: legend of the jungle”. These are just a glance at how Netflix has nailed the business model of streaming services in 2019.
Is awesome content the only reason for this massive leap by Netflix? I don’t think so. It is one of the reasons but not the sole one for sure. There are numerous other platforms with great content, but not all are as successful like this particular giant. I think the best ingredient in this recipe of success was the business model of Netflix.
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How? This article aims at explaining the same. Meanwhile, we would also be explaining other things that video streaming services must learn from the Netflix business model. So let’s first understand the same.
1. Netflix Nailed the SVOD business model | subscription plans
So how Netflix makes money? Netflix makes use of one of the most stressful streaming business models- subscription model (SVOD). No doubt, they chose the trickiest path what others are afraid of doing. When most of the video streaming service is operating on the freemium model, Netflix business plan was to stick strictly to the paid-only access. Its only method of earning from the content consumers is to ask for a monthly membership.
After Netflix, SVOD has become a common streaming business model for every new entrant in the market these days.
How does it work?
Like Netflix revenue model, a pure subscription-based business plan asks users to subscribe to a membership plan to access the content on the platform. On the other hand, the subscribed users get unlimited access to ad-free content for a monthly, quarterly or yearly period.
But Netflix found a way to sophisticate it further
Netflix business plan was not just to start a yet another subscription-based streaming service. Instead, it found a way to earn more than just usual SVOD services do. It offered the full access to all its videos with a fixed monthly cost. However, a further sophistication was made to enhance the regular SVOD experience –
Netflix classified it membership plans into three different categories, based on two aspects-
Different types of video resolution on different plans and,
Different number of allowed simultaneous logins in different plans
The two aspects offered three different sophistication on the regular video consumption experience –
Access to different streaming Qualities- Standard, HD, and 4K
Access to different levels of logins- 2, 3 and 4 users
Users are allowed to subscribe to any of the following three plans and get the corresponding benefits
Basic – offered standard video quality for streaming and maximum of one user only.
Standard – offered HD video quality streaming with a maximum of two user logins at the same time on different devices.
Premium – Offered 4K video streaming with a maximum of four simultaneous logins at a time on different devices.
2. Netflix made costly plans affordably
If you look at the membership plans, they are quite expensive. The base plan comes $7.99/month. This is quite a cost. However, a closer digging would reveal that these plans made Netflix successful without saddling the prices on the subscribers.
For instance, consider the most expensive plan of Netflix, which comes $11.99/month. I seem to like the costliest plan, but in the actual scenario is the cheapest one. It allows a user to add four different user profiles, and let them log in on different devices at the same time. Now, you can ask three of your other friends to share the subscription cost and get the costliest plan at the cheapest rate.
Bottom line: Netflix nailed the trickiest video streaming business model into the most rewarding one. Other business must learn that adopting a business model is not enough. They would need to consider the scenarios where they can re-shape the existing models into rewarding options for both the parties. In fact, considering your customers’ preferences would help you maximize the earnings without looking like doing so.
3. Netflix pioneered the cross-platform content delivery
Tell me a video streaming medium where Netflix does not work. Take the popular mediums for instance- TV, Laptop, Desktop, Mobile, and Tablet-
Does Netflix let you watch your favorite movies on each of these platforms?
Does Netflix let you synchronize your user account on each of these platforms?
Does Netflix have an optimized user interface or application for each of these platforms?
Off course yes! This is yet another factor that made Netflix so popular among the content consumers from all the platforms. In fact, its optimized applications for different modern-day televisions were the sole reason why many people today spend most of the time watching Netflix on TV rather than the regular broadcasted content on Cable TV.
Today, Netflix lets you stream your favorite content from all sort of modern day devices and platforms like –
WebRTC for internet browsers
Roku TV and many more
Bottom Line: If you want to launch a successful business like Netflix, it is wise to make it accessible to all the prospects from all the possible platforms. In a world where there is an internet-based alternative available for everything, video streaming service could be a great success by opening every possible entrance to it for the common users.
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Bonus takeaways from Netflix Business strategy
In addition to the above three major takeaways, I would love to mention the following lessons that I learned from the Netflix business plan-
Happy customers make happy businesses
Despite offering one of the most expensive membership plans in the streaming industry, Netflix nailed the revenue by emphasizing on building long term relationships. Instead of selling once and forgetting the rest, Netflix subscription model also invests a fortune in their customer service. The free trial without any commitment is one such example of the same. It lets the consumers try out the service for free and then chose to continue or discontinue the same. This trial alone is enough to encourage the consumers in Netflix’s service quality.
Content marketing is still the king
Despite receiving a huge word of mouth popularity, Netflix still never fails on the content marketing part. From strategy planning, content development, to content promotion, Netflix content marketing strategies are indeed inspiring. It may sound old-school, but considering the amount of thin content on the internet, it is overwhelming that Netflix still believes in engaging customers with a content marketing strategy. Regular Blog posts, behind the scene leaks, social media posts to YouTube marketing, one can easily find a Netflix content on each of the popular platforms. In fact, the regular social media posts help the company to get many discontinued subscribers back through the popular memes and posts originating from time to time.
Just check out how the recent Netflix movie “Bird Box” broke the records by getting views from more than 45 million user account in just 7 days. Many experts might say that Netflix does not need memes to get views, but memes professionals will never let the opportunities slip from their hands. This is what that happened for this particular movie. Memes started flowing all over the internet, encouraging many others to watch the movie just to know what this fuss is all about.
Subscription-based models are the future
Not just for video streaming, but subscription-based businesses are booming equally in all sort of niches. Today, there are service providers for renting you a range of products like furniture, clothes, electronics, vehicles, and even jewelry. Even economic slowdown cannot force many such businesses to step back. During the economic downturn, people would love to prefer these subscription businesses. It is a wise way to prevent the upfront in buying when people can simply subscribe to one when in need and then discontinue it when not needed. Netflix’s subscribe or unsubscribe anytime approach lets it earns by billing lesser yet recurring amounts instead of asking for the high upfront cost. SVOD is a futuristic idea. No doubt it is expected to capture a gross market of $100 billion by the end of 2020.
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Video streaming over the internet allows users to view and download video content from anywhere on the globe. Utilizing this technology, Netflix launched its videos streaming service in 2009 with video streaming for Hollywood movies and TV series. With aspects like HD video streaming, buffer-less streaming, affordable pricing, multi-user, and multi-platform support, Netflix revolutionized the way video content is consumed by the users; first in America and then everywhere on the planet.
If we consider today’s scenario of video content consumption, the audience is massive. In fact, it is large enough to accommodate Netflix, Hulu, and Amazon Prime altogether. People love watching videos. When one-third of the internet traffic is videos only, there is massive scope for new entrants in the market to claim their share of revenue from this $20,501 million industry.
Considering this trend, a large number of entrepreneurs, who see VOD as a billion dollar industry, are entering in the market with their video streaming services. Netflix being a global example of a well-planned and efficient video streaming service, entice almost every VOD entrepreneur. Our collaboration with the founder of “Netv.net”, Simone, was a result of one such enticement with the Netflix business model and its portal’s architecture.
Simone wanted to launch a video streaming service in America. On our first conversation itself, we were made clear that he wished to start a Netflix-like video streaming service. Though he did not intend to upload as many videos at the beginning, his requirements were not any less than Netflix-like scalability.
You can make a website like Netflix. In fact, it’s not tough to design an identical clone of Netflix. What that makes your video streaming service different from Netflix are your own business model and Content quality. Simone was certain about adopting an identical business model like Netflix. However, he had some unique content ideas for his own version of the same-
Original content from independent creators
Prize-winning movies from film festivals
Popular web series content
The primary focus retained the intentions to fit original films from film festivals. Numerous film festivals occur everywhere on the planet. Many of them win some prestigious awards. However, such high valued content gets lost in the crowd of massive commercial films released every week. What a waste of some high-value and revolutionary content! The founder of NeTV wanted to give a commercial platform to such content. A win-win relationship where these awesome content creators get a platform and the platform gets some high valued, unique and exclusive content for its audience.
As we started evaluating the requirements, we found the following main challenges that needed our prominent attention-
Film festival content– The platform was supposed to fit originals, which is an inherited feature from the Netflix. However, the challenge was to design a home-page and category architecture that show-cases this content as a USP to the new users landing on the website.
Global Standards– Though the client primarily aimed at acquiring the audience from America, he was also open for worldwide consumers. Hence, the challenge was to design an internationally acceptable UI and architecture.
Registration Flow– The first thing that comes in mind with a Netflix-like business is its ground-breaking registration flow architecture. With this flow, a user can access the content only after registering a user account. The user registration flow actively involves the steps in a particular order-
Select a plan
Provide details(Name, Email, Contact Number)
Verify details (Email or Contact Number)
Continue browsing as per base plan
The challenge was to tweak the Registration flow with a custom requirement, which demanded the following flow:
Register user account
Select a plan
Free Trial– In this whole customized Registration Flow, the challenge was fitting a “One-month free trial”. That too with a selected subscription plan. After selecting a plan, the user is supposed to continue with a free one month trial.
Cancel Anytime– Like Netflix, the user must be allowed to cancel the subscriptions anytime.
Subscription Plans– The platform was supposed to offer three plans: One-month free trial, Plan-1, and Plan-2.
Auto Renewal– As soon as the trial is finished, the user subscription would be automatically renewed as per the selected plan
Categories on Homepage– We were supposed to implement the categories-architectures to segregate Originals, Film-festival content, and Web-series separately.
Cross-platform support-Last but one of the biggest challenge was making the platform compatible on almost every device. NeTV users were supposed to stream the video content anywhere from the following platforms-
Coupon Management System- Like every smart online business, NeTV too wanted to offer various discounts to the users. For this, the platform was supposed to offer a coupon management system where the admin can create, deploy, and track discount coupons.
Content Moderation Dashboard- The Platform was supposed to offer a separate dashboard for content creators. Using this front-end dashboard, the content creators can upload their content, which will then be inspected by the Admin or Moderators before publishing them to the public.
Commission management system- The content creators would be paying commissions to the Admin. We were supposed to integrate both – a percentage-based commission system and an absolute amount-based commission system.
The Turnkey Solution
Netflix has done an exceptional job of anticipating the consumer needs and preparing its platform accordingly. After analyzing the requirements and post multiple communications with the client, the most suitable solution we settled on was a Netflix clone script. We selected our StreamView Netflix clone to do the job as a base script for the project.
The main reason for selecting the StreamView script was its similarity with Netflix’s architecture. Moreover, as per the client’s requirements, this script also offered the exact UI that he wished for. Just a few tweaks and UI-design would have been ready.
Requirements that were fulfilled by the base clone Script
Luckily, a majority of the requirements were seemingly being fulfilled with clone script alone. Here is a list of requirements and how Netflix Clone was able to offer the same with minimal or negligible modifications-
[table id=3 /]
Business Requirements & SRS Documentation-
Based on the requirements analysis and solutions we proposed, an SRS document was prepared and shared with the client. After three iterations involving the client’s approval and modifications, we finalized the final document and started with the Implementation phase. With most of the requirements being already fulfilled with the base Netflix clone script, we moved to the customizations phase.
As the majority of requirements were fulfilled by the based script, we had to perform minimalistic customization on the following features-
Registration Flow: We tweaked the registration flow to re-arrange the process as per the requirements (as stated in the ‘Challenges’).
Subscription plans– The default script offered four plans. Using the integrated plan management controls, we allowed the client to set new plans as per his choice. Default plans were one-month free trial plan, and three other plans like Netflix. The new customized plans were one-month free trial, and two other paid plans.
User support– Default script allowed a maximum number of simultaneous logins similar to Netflix. However, we had to tweak a little to allow admin to change the logins as follows: Plan 1 with SD video support and 1-login allowed at a time. Plan 2 with HD videos support and 2-Logins allowed at a time.
Technologies utilized in the project –
The Readymade Netflix clone script was built on the following technologies.
Bootstrap – Frontend Framework
Angular JS – Frontend UI
Laravel 5.2 – Backend
MYSQL – Database
Nginx Server – Streaming engine
DigitalOcean – Server Hosting
Firebase Cloud Messaging- Push notifications
REDIS Server and Queue Concept – Dynamic video compression and Resolution conversion.
PayPal Payment Gateway –on-site transactions
BitBucket- Version Control System.
Facebook and Google Plus API- Social login
JW Player-video player
SMTP- Email delivery
GreenDao- Android ORM
AFNetworking- Library for Apple devices
Process and Approach
A team consisting of the following members was assigned to the project-
One project Manager
One SEO expert
One graphic designer
One web designer
We followed the agile model to develop the final script. Post each phase, the project was sent for review to the client as we kept posting of the progress through Trello Project Management System. The process continued in the following sequence-
Design- Finalized the design of the website.
Prototype- Prepared a prototype design using HTML and sent for review to the client.
Development – After multiple iterations, we finalized the design and continued with the development phase.
Testing- Post development, we conducted multiple testing sessions with different approaches and analyzed the software with functionality, regression, and strain testing.
Beta Phase- Post multiple iterations of testing and error handling, we exposed the beta version to a group of hundred users.
Re-development– We went through multiple iterations again to fix the issues detected in the beta phase. The project was again exposed to final testing before delivering the final version.
As per the customer requirements, the following applications were delivered to the client. All of the applications are synchronized with the WebRTC version of the project through a web service script.
Android Mobile App
iOS Mobile App
The stable versions of the website and all the applications are now live. In a very short span of launching the service, the platform was able to get some decent number of customers. The business is performing extremely well with is unique value proposition of exclusive content, affordable plans, and multi-platform support.
The service currently offers three subscription plans-
One month free trial- with no commitment required
Popular plan- with $6.99/month and maximum one user allowed
Premium Plan-with $9.99/MONTH with maximum 2 users allowed
The client speaks and as we quote-
When asked the Founder about experiences with StreamView clone and StreamHash’s team, here is what he says:
Q1 – What made you start NeTV?
I have been working in the industry as marketer analyzer for many years, and since the beginning in early 2012 I have noticed that filmmakers work hard but not always received the recognition they deserve. NeTV is behind the filmmakers allowing them to easily distribute and profit their movies soon after attending the Film Festival. Many films get lost nowhere unless continuing financing the film in the hope to find distribution without losing any rights or loyalties. With NeTV it is possible.
Q2 – What makes NeTV stand out from the crowd?
NeTV is an independent network. Our platform will broadcast only originals independent films from festivals.
Q3 – Who are NeTV customers?
All major film festivals organizations around the world will join NeTV with their movie programs, from feature movies to short movies of any genre.
Q4 – How did you find StreamHash?
We have found StreamHash through the internet as it is the best-voted company outside the US to develop such a platform like NeTV.
Q5 – What challenges were you experiencing prior to purchasing our product or service?
None that I remember.
Q6 – How were the initial conversations with StreamHash Sales team? Can you specify how easy it was to gather requirements and kick off the project?
It was very simple to request the services through their website and soon after one of their personnel connected with us via Skype.
Q7 – How was your experience with StreamHash during the development process?
Excellent, they are working hard around the clock, always available.