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How To Start A Streaming Service Like Netflix Wisely: Business Model To Follow
What is the best way to spend your free time? Each of us makes their choice. Fishing, cycling, reading books, watching TV… Hey, watching TV is a cool thing, isn’t it?
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Today you don’t need to wait when your favorite movie or TV show appears on TV. Online video streaming rules the world. Video-on-demand websites like Netflix or Hulu allows you to watch a movie or TV series whenever you want on a subscription model.
This is what people need today — high-quality services that will provide them with an extensive TV content database. So why don’t you use this idea to create a video streaming website?
You don’t need to compete with Netflix. Your task is to implement everything properly following the success path of Netflix. That’s the main idea. But let’s not beat around the bush. Turn to the comprehensive guide on video-on-demand service development.
What Is Video-On-Demand Service and How Does Netflix Streaming Works?
Video on demand, or VOD, is a type of personal delivery of media content to the subscriber. The sense of this service is clear, we guess. You want to watch a movie or any other relevant content, but you don’t want to buy a DVD or spend your time surfing the web, trying to watch it in good quality.
Thus, you can subscribe to VOD services like Netflix, Amazon Prime, Hulu, etc. and find licensed content you like (always in HD quality), and watch it any time. You don’t need to leave your comfortable armchair, you don’t depend on a TV schedule, and you don’t need to look for a free space in your house to store DVDs which you may never watch again.
That is the principle of Netflix service functionality. You rent media content for a certain period, and you can watch it whenever you want without advertising. But what is the secret of Netflix’s success? Find it out below.
What Made Netflix So Popular
The number of subscribers of Netflix grows exponentially year by year. According to Statista, in the second quarter of 2020, Netflix had 192.95 million paying subscribers worldwide. At the beginning of 2019, the number of subscribers reached 131.7 million. What does Netflix do to attract new users?
Netflix started its way as a DVD distributor by snail mail. The company was the first one who launched a DVD-by-mail service. And due to a competent management team, the company has always been trying to keep up with trends and adapt to any changes timely. So in 2007, Netflix launched its online streaming service, and it gained momentum almost immediately.
The matter is that Netflix offered users streaming media content at a relatively low cost. And it was cheaper for users to watch a movie at home than go to the cinema. Thus, users were able to watch HD quality media at home, at any time.
Another secret of popularity is the proper service level. Reed Hastings, a co-founder of Netflix, has repeatedly stated that Netflix is an IT company first. What does it mean for users? It means that everything runs like clockwork. High quality of sound and video, high stability, and usability — that is what Netflix provides. So how to start a TV streaming service? Do everything properly, first and foremost.
Business Model Canvas Of Netflix
Also, a large portion of the success lies in the business model adopted by the Netflix team. We want to list the principles of business model canvas Netflix adheres to. It will help you understand how to create a video streaming app and succeed.
Key Partners. Netflix actively cooperates with different media partners to build a robust environment for content delivery. For example, Netflix partnered with Samsung to provide Samsung Galaxy smartphone users with streaming services.
Value Propositions. Netflix’s primary goal is to provide top-notch customer experience and allow users to take advantage of Netflix service (unlimited access to content, always HD, no ads, etc.).
Key Activities. Since 2013, Netflix has also invested money in the creation of original content. Today, Netflix serves not only as a streaming service but also as a studio of its filmmaking and production. But streaming remains the main activity.
Customer Segments. The streaming app provides different media content types and genres, targeting all age categories — both children and adults.
Customer Relationships. Netflix's critical mission is to offer user-friendly and straightforward service to users, deliver valuable customer experience, provide 24/7 customer support, share bonuses like gift cards to increase customer loyalty, etc.
Key Resources. Smart software and development team are the key resources of Netflix. Smart algorithms help users select content by preferences and watched movies, and developers are the ones who ensure the high and stable functionality of the app.
Channels. Users can access their profiles from different devices like mobile phones, smart TVs, and gaming consoles.
Cost Structure. Netflix segregates its expenses to calculate incomes and outcomes. Licensed content purchases remain a significant investment made by Netflix.
So How Does Netflix Make Money?
The subscription-based revenue model is the leading monetization method Netflix uses today. Users can choose a subscription plan that meets their demands. There are basic, standard, and premium plans that are paid monthly.
The basic plan is for one device and lets users watch any content in standard definition. The standard plan allows users to add two devices and watch a video in full HD. The premium plan provides 4K quality for four devices.
Steps On How To Start An Online Video Streaming Business
We think it is reasonable to divide steps into business and development ones. And we will start with the essential business steps that can help you create a video streaming app.
Choose Your Niche
We stated above that you shouldn’t try to build a streaming app that will beat Netflix. The value of your future streaming service lies in its on-demand proposition. Thus, you can create streaming services for sports, educational streaming, healthcare-related topics, cybersports, etc. That is, you need to analyze the market, analyze competitors, and single out niches that people need, but they are not widely available yet.
Know Everything About Your User
If you want to know how to start a business like Netflix, you need to know your potential user first. And your next step is to do user research. User feedback and reviews must be your handbook. The guide from Cadabra Studio will help you get more insights on how to do it.
Okay, you should know customer pains and demands. The Netflix app and relevant streaming services analysis will be an excellent option to avoid their mistakes. As for major Netflix drawbacks, you will find this section below.
Remember about location issues. You will probably start with the development of streaming service for a specific region first, and you need to understand what users lack there. If you didn’t know, Netflix provides content that can be unavailable in some regions, and you should elaborate on it and think about how you will solve it.
Compliance With Legal Regulations
The best business policy is honesty. The media content you will provide users with must be licensed and purchased according to the legal rules. How does Netflix do it? Everything is simple — Netflix purchases licenses for movies, TV shows, series, cartoons from content owners, and sign licensing agreements.
The owner may state certain restrictions in the agreement, like geolocation restrictions (you can stream it only in one or a few countries), or any other. All agreements have their expiration date, and then you may negotiate a renewal with the content owner if it is reasonable.
When you think through all the nuances of how to create an app like Netflix, remember that unlicensed streaming is illegal, so deal with all copyright issues adequately.
Define Monetization Models
As for online video streaming, the subscription model is the most widespread revenue method. Users can subscribe to the services of your app, buy monthly or annual subscriptions. Remember that a yearly subscription must be a more beneficial option than a monthly plan.
Another way to monetize your streaming service is to offer free videos with advertising. Thus, users don’t pay anything, but they will have to watch an ad that cannot be skipped. This revenue model is controversial — there are always people who don’t want to pay for online videos, and they are ready to watch an ad. But usually, advertising irritates users, and they want to pay for ad-free content.
Additional Steps To Create Movie Streaming Website
Now we can talk about development steps that are required to create a website like Netflix. These steps are similar for other websites or mobile apps, but each project requires its individual approach.
Start With UI/UX Design
We bet you know that an attractive user interface and intuitive user experience are crucial. And this is what you should do first. The development of your website won’t be initiated until you hire a UX designer and let them create a design of your service.
Why is the designer the first one to hire for your project? First, they collect information about the project and its target audience. Second, they design a specific scenario. Other key responsibilities of UI/UX designer you can find in our article.
So, skilled designers will conduct customer research, UX research, choose relevant color models, build prototypes of your website. The online streaming service should have simple navigation and an eye-catching interface. If users want to keep on using your website, it means you did everything right.
Make A Feature List
Analyzing how to start a streaming service like Netflix or Hulu, you cannot bypass the list of MVP features. An MVP (minimum viable product) means that your website will only contain basic features, but it may be enough for a start. Moreover, MVP is crucial because it allows you to test an app with minimum investments. Your Netflix-like website should include the following set of features:
Registration. You can provide social login to simplify the registration process and let users sign in via their social media profiles. However, to avoid unauthorized access by third parties, it is recommended to add registration via an email.
User profile. Once users are registered, they can add a photo, write some information about them. This information will be helpful for your service since you may set up algorithms to target users with specific content they may like.
Search. Users can find the content they like using an integrated search system. Mind to add filters to help users narrow down their search results and find what they need faster.
Reviews/ratings. Users should be able to rate all media content your streaming service contains. Also, they can write comments or reviews to share their opinion about the movie or TV series.
Chat. It is required for users to chat with the support team if there are any problems or questions.
Push notifications. Information about new content available, particular propositions, discounts, etc. — everything will be available in the form of messages on the screen.
Payments. Add reliable payment gateways like Braintree or Stripe to let users make secure payments for services provided.
Settings. Such settings like the selection of format, volume, language, and quality of video are must-have for any streaming service.
Offline mode. When users select a video to watch, make it possible for them to watch it in an offline mode, so users enjoy their free time even if they don’t have an Internet connection.
These features are necessary for your Netflix-like website. However, there are some could-have features we recommend to consider.
The first one is the content recommendation algorithm. The smart AI-based algorithm creates a personalized customer experience and recommends the preferable content based on videos watched before and personal preferences. It directly impacts the increase in customer loyalty.
The second feature is screenshot blocking. Netflix uses it for a good reason — it prevents any attempts of pirates to make screencasts of the video. So think about it.
Now you need to contact a software development team that will build an online streaming website for you. Although, if you hire a full-stack software development company, then UI/UX design, quality assurance, and development services will be available by default.
As for the number of platforms, we recommend you to start with website development. If you want to create a Netflix-like mobile app, you’d better do it later when you test a website, and if it starts generating revenue.
Cadabra Studio is a software development and design company that knows how to create a movie website like Netflix and what particularities and pitfalls the development process may include.
Cons Of Netflix Or How To Create A Video Streaming Website Avoiding Mistakes Of Competitor
Netflix also has some drawbacks. It is not an ideal service. If you know all the disadvantages of the popular streaming service, it will help you achieve your goals more efficiently.
– Uncertainty of content. Netflix has one weird particularity — it removes shows or movies from its database periodically. Thus, if you want to watch your favorite TV series again, you may come across its unavailability. It might be a shocking challenge for somebody who paid and wanted to enjoy themselves.
– Geo-restrictions. The problem is that US residents have a more extensive media content database than residents of any other world region. Many TV shows and films may be unavailable in other countries. The only option is to use a fast VPN service that may also be paid.
– Outdated library. Surprisingly, but you won’t find the latest movies and TV shows right away they are released. The database of Netflix is somewhat outdated, and it needs updating more often. And it makes many people irritated.
Technical Aspects To Consider When You Create Your Own Netflix-Like App
A streaming service requires compliance with many technical standards to ensure proper and seamless functionality. If there are technical issues with streaming processes, users will likely abandon your app. Although it is the development team responsible for the technical part, you should also be aware of it.
Format. All videos in your streaming service must be in a format that is supported by all devices and operating systems.
High bandwidth. The speed of video loading is crucial. Users don’t want to wait for a long time while one movie will load. So you will have to invest money to ensure sufficient bandwidth so that users can stream videos quickly.
Quality variations. Users should be able to change the quality of video content if they have a low-speed connection at the moment. Or you can ask developers to set it up automatically.
Use reliable CDN solutions. CDN, or content delivery network, is a critical technology to deliver streaming videos to users. It is better to use a few CDN solutions to increase the stability of functionality and avoid interruptions in case of emergency.
Encoding. Encoders must be available to transform video content into a different format. When it is encoded, it is turned into a digital copy that can be transmitted via the Internet.
Low jitter. Jitter means any lags in the streaming process like images freezing, desynced audio, etc. It is necessary to make jitter as low as possible.
Security. Finally, one more crucial tip on how to create a video app like Netflix is protecting it from unauthorized access. SSL encryption for payments, token security to prevent redirection to the third party without approval, geoblocking settings, and watermarking to prevent copying.
Technology Stack Of Netflix-Like Streaming Service
When we create your app, we will use tools that will meet specifically the requirements of your app. However, we can list a few tools that may potentially be used to create an online streaming website.
Frameworks and libraries: React, WinJS, Node.js, Ruby on Rails, Django, Hadoop
Database: MongoDB, MySQL, DynamoDB
Web server: Apache, Nginx
Cloud storage: Amazon S3, AWS CloudFront, AWS Elastic Transcoder
How Much Does It Cost To Build A Netflix-like Website?
The most critical question you want to ask because you want to plan your budget, don’t you? Unfortunately, it is impossible to quote the streaming website development until you provide us with detailed requirements. Then we will draw up a precise estimate considering all nuances of a future project like design and software complexity, tech stack, number of features, and hourly rates.
The latter is mostly a crucial factor. You should know that the location of the development team directly impacts the final cost of your app.
The US-based developers' hourly rates range between $130-200, whereas developers in Western Europe charge about $75-125 per hour. Eastern Europe may boast about hourly rates like $35-50, but companies in this region build first-rate products that become world-known.
For example, Ukraine (location of Cadabra Studio) is famous for such projects like Grammarly, Mobalytics, Depositphotos, GitLab, etc. They were built in Ukraine and by Ukrainian developers.
Thus, if you need a professional team that will show you how to create a video app like Netflix, hire Cadabra Studio. We are open to discussing an optimal budget for your streaming app, providing qualified assistance.
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