Netflix’s functioning: its migration on the cloud and its content delivery network

Last Friday, we briefly talked about the complex relationship between Netflix and Amazon. Indeed, Netflix is running on Amazon’s public cloud (AWS) but Amazon is also a direct competitor of Netflix, since it also launched its own streaming video service. This consideration triggered my interest in Netflix’s functioning, including its migration on the cloud and its content delivery network.

 

Since January 2016, many articles praise this successful migration on the cloud. However, a closer look at Netflix’s structure unveils that it is using the cloud only for computing and storage needs. [1] It includes keeping track of all the users, their preferences, the organization of the company’s content, etc. Of course, this migration has brought many advantages to Netflix: it enabled the company to support an incredibly fast and global growth. It is also important to notice that this migration began in 2008. Why did it take so long? This is due to the challenges of cloud implementation, since such a migration does imply a lot of work. In this case, Netflix operated a complete rebuild of its structure.

 

We talked about Netflix using the cloud for its computing and storage needs, but what about its core business, video streaming? In fact, Netflix does still use data centers for its content delivery network: Open Connect. [2] Open Connect can be described as a network of data centers around the world: its purpose is to bring Netflix content closer to its customer. Thus, there are thousands of Open Connect Appliances (OCAs) around the world and they distribute 100% of the video traffic. In Brief, everything happening on Netflix before hitting play is running on AWS cloud, then the OCAs take over. [3]

 

A crucial aspect of Open Connect is the establishment of partnerships with the Internet Service Providers (ISPs): the OCAs are interconnected with the ISPs. [4] Indeed, Open Connect was established in 2011 for two reasons. First it became almost inevitable to work with ISPs because Netflix accounted for a growing proportion of their activities. Then it was also a way to support the growing activity of the company. It is quite easy for ISPs to engage in a partnership, since Netflix does provide many explanations and a guideline to show how to deploy OCAs. It also lists the different options, the engagement process and the requirements. [5]

 

Let us now come back to the question raised at the beginning, related to the complex relationship between Amazon and Netflix. Will Amazon reconsider its relation to Netflix, which is one of AWS biggest customer? Indeed, Amazon streaming video service is a direct competitor to Netflix, since it has not only quite the same functioning and subscription fee, but also similar strategic ambitions overseas with the willingness to operate in as many countries as possible. [6]

 

The thing is, if Amazon becomes a threat, Netflix would obviously go for another cloud provider (Microsoft, Oracle, IBM, etc.) and it would be damaging for AWS, which is one of Amazon’s most important business. Thus, I think that Amazon should avoid becoming too aggressive toward Netflix.

 

 

 

[1] https://media.netflix.com/en/company-blog/completing-the-netflix-cloud-migration

[2] http://www.networkworld.com/article/3037428/cloud-computing/netflix-is-not-really-all-in-on-amazon-s-cloud.html

[3] https://openconnect.netflix.com/Open-Connect-Overview.pdf

[4] https://media.netflix.com/en/company-blog/how-netflix-works-with-isps-around-the-globe-to-deliver-a-great-viewing-experience

[5] https://openconnect.netflix.com/en/

[6] http://marketrealist.com/2016/11/amazon-putting-aws-risk-taking-netflix/

 

 

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6 comments on “Netflix’s functioning: its migration on the cloud and its content delivery network”

  1. I agree with you in the fact that Netflix, through using the same cloud provider, which is run by Amazon, might be seen as a threat and competitor to Amazon.
    I also see how Amazon is perhaps the most benefited through this agreement, due to expanding its AWS business, as well as gaining competition. Competition being a likely driver of growth.
    Netflix, as you mentioned, could consider switching to a different cloud provider, but that could prove to be a difficult and risky move. To Netflix, it might be more beneficial to cling on an already settled cloud server, which at the same time benefits them through the expansion of Amazon’s streaming service.
    I also agree with you in that Amazon should be less aggressive with Netflix, as this business partnership hasn’t yet achieved a compact status, and that could lead to future considerations to switch.

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  2. Thanks for the interesting post, Nicolas! I read an article a while back that mentioned that Netflix accounts for about 36% of global internet traffic. Interestingly, like you mentioned, they’ve managed to prevent the internet from grinding to a halt despite transmitting mammoth quantities of data. A Popular Mechanics article by Eric Limer published on March 28th, 2016 titled “Netflix Generates More Traffic Than the Entire Global Internet” provides an interesting analogy to the OCAs you mentioned in your post. Limer says that OCAs are essentially massive hard drives located all over the world that store all of Netflix’s content. In order to transmit the high quality videos, Netflix only needs to access the OCA nearest to your location. Limer writes that, “the ones and zeros that make up that movie don’t have to travel all the way across the internet from Whoknowswhereisota, but instead just has to saunter a few miles from a nearby data center. It takes the bulk of the traffic off the internet’s global freeway and concentrates it your less congested local roads instead.” Definitely an interesting strategy (and I’m sure costly as well, as it’s probably not cheap to house giant and robust hard drives all over the world) to deploy massive amounts of data to the general public without clogging up the internet.

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  3. This was a great read Nicolas! I was also intrigued by the points Professor Barreto brought about the relationship between Netflix and Amazon. What was unclear to all of us were the legal obligations for data privacy. Since Amazon Prime Video is a direct competitor to Netflix, it has a conflict of interest being a cloud provider for Netflix.

    While in theory it is possible for Amazon to access and monitor the data, it goes against its interest to violate its legal obligations of data privacy and security.
    “We do not access or use customer content for any purpose other than as legally required and for maintaining the AWS services and providing them to our customers and their end users.”
    https://aws.amazon.com/compliance/data-privacy-faq/

    Amazon provides advanced tools for developers for access, encryption, and logging features to consumer content (https://aws.amazon.com/cloudtrail/). This helps satisfy customers from worrying about data theft when a conflict of interest may exist.

    This article provides a great overview of cloud computing: http://www.bbc.com/news/business-36151754 — it shows that Dropbox uses an encryption method called “sharding” that stores data into blocks (so even if the data is decrypted, it would only lead to access of a random block).

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  4. I appreciate the topic you chose because of the potential threat to two major companies today. I can definitely see your point and why you asked about a situation that may arise between these two powerhouses of the Internet. The use of cloud of Netflix may be simple but since they were late and had to reconfigure their structure I believe that their choice to use it makes sense in a business aspect. Just looking at how huge Netflix has become off of the system that they currently use, anyone can see the importance of cloud and how much big companies rely on it. However, I do like the idea of there still being some competition between the two as competition usually helps the consumer. Thank you for the interesting post!

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  5. Hey Nicolas,

    I liked the topic you chose because it is very important to understand that “Netflix runs on AWS” doesn’t mean “AWS has everything Netflix has”. It’s great that you mentioned the ways Netflix tries to improve the user experience delivered and these are the possible technical advantages they currently have against Amazon video streaming service. This can even be called as foreshadowing for the small but promising future companies. Thank you for the article.

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  6. Hi Nicolas,

    Great post, it was really interesting. I definitely think that Amazon will want to stay on good terms with Netflix because of the fact that they are one of their biggest customers, but you could also argue that Amazon has some leverage over Netflix in the sense of them being one of the biggest (and in many people’s opinion, also the best) service provider. Seems smart to run their own OCAs.

    Thank you for the intuitive explanation of the relationship between the two companies!

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