What You Need to Know to Start a Streaming Service Like Netflix

So, you've decided to build your own Netflix? Cool! That's a great time to create either a video streaming website, or set off the app business. But how to start a streaming service like Netflix, Hulu, or Amazon Prime Video? Which business model to take as an example? Should you create a Netflix clone, or fall for building a streaming platform? Let's take the journey on how to start an online video streaming business together.

Streaming services battle the cable TV by live and on-demand movies, shows and series available anytime, anywhere. So where to start a streaming service like Netflix? To cover this question, we're going to discuss:

What Makes Streaming Business so Popular?

Netflix. The word itself brings up some entertainment concepts in your mind. Even though you've never been its subscriber, you surely have heard about it. The first suspicion: all the subscribers and revenue came due to the performance of its team of magic-making. Partly, it is so.

Partly, it is because of the SVOD model and original content. The smart and convenient way to watch fascinating and original movies and series on any device, anytime. No ads policy has played a huge role, too. 

A natural question here: Why do people give their preference to Netflix? The top reasons are:

• no ads distract you from a movie or show
• a wide choice of stuff to watch
• an option to binge-watch
• the original content

That may look like an infomercial reasoning, but the popular streaming services have a basic difference in service on-demand model and pricing. So here is another list of shared reasons for choosing streaming services over cable TV.

A quick recap: the video streaming websites and apps gain such a smashing success thanks to high-touch customer experience. As this industry keeps evolving, there are pretty much free niches that expect for its dedicated streaming service.

The Best Streaming Services of 2020

Sounds inspiring. But still, what are the best video streaming services around the world? They have literally various shapes, sizes, content offerings, and customers who pay for watching their content. Here is the list of the services with the largest subscriber bases.

If you target the US market, then you should look closely at the Techradar list, Business Insider list, PCMag list of streaming services. After the comparison, there is a fantastic six. (These services appear on each list or on two of them.)

Netflix

What is it: One of the hugest on-demand movies and series libraries. Netflix has an affordable price and no ads. Yet, there is no live TV option.

What devices it supports: Android, Apple, Windows, Roku, PlayStation, Xbox, Google Chromecast, Amazon Fire TV Stick, Apple TV, Smart TVs.

Max streams: 4

Ideas you can steal: An intuitive user interface to speed up user onboarding.

Amazon Prime Video

What is it: Another large library of movies and original series. It worth mentioning that it comes in the standard Amazon Prime.

What devices it supports: Android, Apple, Windows, Roku, PlayStation, Xbox, Google Chromecast, Amazon Fire TV Stick, Apple TV, Smart TVs.

Max streams: 3

Ideas you can steal: A monthly free access to get a customer on a hook with series or shows.

Hulu

What is it: The service is a coin - it has two sides: an on-demand streaming service and Hulu with live TV. The last one is an alternative to cable TV that is available only in the US.

What devices it supports: Apple, Android, Windows, Roku, PlayStation, Xbox, Nintendo Switch, Google Chromecast, Amazon Fire TV Stick, Apple TV, Smart TVs.

Max streams: 1

Ideas you can steal: These lower prices and the ads are running in paid plans.

Disney Plus

What is it: A family-friendly streaming service with the on-demand Disney, Pixar, Marvel, Star Wars, and National Geographic content.

What devices it supports: PS4, Xbox One, Samsung and LG devices, Roku players, Amazon Fire TV and Fire tablets, Apple TV, Android TV, Android, iOS, Chrome, Firefox, Edge, Google Chromecast.

Max streams: 4

Ideas you can steal: Make your service suitable for a specific niche or content type.

YouTube TV

What is it: A full service: live TV streaming and on-demand content. Youtube TV offers Disney networks, ESPN, AMC, SyFy, and FX and many other channels.

What devices it supports: Apple, Android, Windows, Roku, Xbox, Google Chromecast, Apple TV, Smart TVs.

Max streams: 6

Ideas you can steal: Support user-generated video uploads.

HBO Go

What is it: HBO Go is on-demand access to original HBO content. This spring the vendor rolls out HBO Max - TV streaming and on-demand video service. It expected to bring the Warner Bros. library and content from TCM, Cartoon Network, Adult Swim, Studio Ghibli to the existing HBO movies and series catalog. 

What devices it supports: Apple, Android, Windows, Xbox, Google Chromecast, Apple TV, Android TV, Smart TVs.

Max streams: 3

Ideas you can steal: Keep the focus on your own content.

Netflix Business Model: What's Behind Its Success

What is the primary determinant of Nextflix's success? Is it a monetization model? Or maybe its transparent plans? Or do they succeed due to the original content? Long trial period? Or this how they developed customer lifetime value? Unfortunately, this is no secret sauce. The mix of these components delivers such popularity and profitability. Let's dig into this a bit more before you go down to drawing your startup business plan.

SVOD model 

Subscription Video on Demand (SVOD) has proven to be a money-making model. By whom was it proven? By Netflix, HBO, Hulu, and other services. It works quite simply: you pay a small recurring fee for access to the video content anytime on any device. As a provider, you can set a specific billing: daily, weekly, monthly, or annually.

Pricing plans

At the heart of Netflix pricing policy two points: (a) video streaming quality and (b) a number of simultaneous streams. From there you got three options:

• Basic - a standard quality and one device to stream video.
• Standard - HD quality and 2 devices to stream video.
• Premium - 4K video streaming on 4 devices simultaneously.

Source: https://www.netflix.com/signup/planform

Original content

Starting as a DVD rental service, Netflix quickly came up with the fact: Nobody would pay for watching movies and series that you can watch on TV or find on the internet. So they invested in the original content that is streamed on their OTT platform. These include exclusive shows from third-party studios and their inhouse created series.

It proved the company’s money is well spent. No wonder that in recent surveys Netflix takes the top position as the best original content provider (among stream services).

Source: https://civicscience.com/netflix-original-content-lovers/

No commercials

What can spoil a gripping movie that keeps you on the edge of your seat? Ads. Repetitive commercials. That's the most common thing we all hate about TV. Taking that into account, Netflix runs an ad-free business. So you keep binge-watching without missing a beat on commercials.

User lifetime value

The user flow on Netflix looks like this: 

register an account > enjoy 30 days trial > choose a plan > pay a subscription fee 

The thing with a free month looks logical and indeed marketing one. Even a heavy binge-watcher won't manage to view all series, but definitely get hooked on watching more. However, don't think that this is a universal hint to gain a subscriber for a long time.

To get sustainable revenue flow, you should attract new subscribers and keep the existing ones engaged, too. How to figure out what performs great and what needs updates? Here is where you need analytics - the source for further the customer outflow tactics implementation. Apart from collecting the information on

• subscribers behavior
• search requests
• ratings
• viewing history

One more ace in the Netflix sleeve is a recommendation algorithm. Their recommendation system (CineMatch) is based on machine learning. More than 80% of the TV shows subscribers discover and watch suggested by this algorithm. The system analyzes implicit and explicit data collected from multiple sources. Then makes personalized suggestions on movies or series (it thinks) you'll like.

Source: https://netflixtechblog.com/learning-a-personalized-homepage-aa8ec670359a

A quick recap: Netflix provides a unique value proposition - an accessible and affordable SVOD service with original content and no ads. How can you apply this business model to your startup? Let's figure out.

How to Start a Streaming Service like Netflix?

You have a clear, concise idea that will help to set you apart from the competition. Great! But if you still consider a few options, focusing on the specific niche will make things go faster towards creating streaming service.

Targeted Audience

Netflix runs movies and series of various genres and categories. It is tempting to go this path too, but that isn't a good choice for a startup. You will be a small player battling in the arena with giants. What makes sense is to stick to a specific niche and dig into the audience’s interests. So you know what content to produce and stream. Or in simple English: for what content people are ready to pay.

The video streaming industry grows into a perspective one. So you can turn your attention to such niches as

• Education
• Fitness
• Sports
• Gaming 

Content for Video Streaming

Once you know your target audience’s preferences and interests, you can work on the content you're going to stream. Ideally, the programs should be engaging and original, otherwise, what's the point of paying for such content.

Here's a couple of 'dos' during content planning and building:

• What is the length of your videos?
• Will they appear one-by-one or will you roll out the whole series/season at once?
• Are you going to buy content from their-party studios? Or will you create it in-house?

If you want to stream series or movies, you can buy licensed content at least in three ways:

1. rent it from the authorized distributors like SWANK or MPLC
2. get in touch with copyright holders
3. check up content marketplaces like Vuulr, Allrites, RightsTrade, or MediaBank

Monetization

You think that the SVOD model isn't the perfect option for your startup. Well, if it doesn't suit your goals, you shouldn't shoe-horn your product into it. How about taking a look at other models?

• Transactional Video on Demand, aka TVOD. You get charged for each video or series. In SVOD, you pay for access to all content libraries, and here you pay per view. It is like iTunes and Google Play.
• Ad-based Video on Demand, aka AVOD. You provide all content for free, but all subscribers will enjoy watching the commercials. The ads can appear at the beginning (pre-roll-ads), in the middle (mid-roll-ads), and in the end (post-roll-ads) of the video. The first example of this model that crosses the mind is YouTube. 

Note: This model brings the smallest profits in comparison to SVOD and TVOD.

You can also create a so-called hybrid model and mix the features of those three. At a glance, it looks like it brings you a broader audience. On the second thought, this hybrid approach may lead to complicated pricing plans. So to keep things clear and strike a balance here, of course, just as you would with most things in life.

Starting Point of Video Streaming App Development

• Tech Stack of Your Own Netflix

As trends go, the website and branded apps become rather a prerequisite, not a luxury. On the MVP stage, gravitate to developing an app for one platform. So you will test the product in the market and get feedback. Either way, you can outsource the tech needs and get two apps for Android and iOS built on, for example, React Native.

Once your streaming service proves or disapproves of your concepts about the niche, you can go to building a video streaming service website.

• Design and Usability

How to create streaming services like Netflix? Make it simple and actually intuitive for the user. Fewer distractions and no image overloading. Going further from abstract and closer to concrete, let's enlist must-keep and nice-to-have features:

• Must-keep features

• Registration. Strive to make it as convenient as possible. You can offer sign in via email or social network accounts.
• Homepage/user profile. It's good to have your own page with information about your subscription and account details: name, profile picture, username, subscription plans, location, feed preferences.
• Payment gateway. It is really important because people should pay to become your subscribers. Android and iOS support their own payment systems. If you plan to run a website or web app, Stripe, 2CheckOut, or PayPal can be your options.
• Search. This option will enhance the filtering of the content library.
• Push-notifications. Mild reminders about the new content, subscription billing, or other technical notifications to a subscriber. Such a feature is good to have.
• Settings. The uber-important options of video manipulations, like pause/stop, subtitles on/off, rewind, volume control, and so on.
• Administration panel. This option is going to handle analytical information, content and user management.

• Nice-to-have features

• Chat and comments. The choice of this feature depends on the content you stream. Netflix had this option omitted as it wasn't used much.
• Screenshot blocking. Quite useful for preserving copyright matters. Though, this option is supported only on Android OS.
• Recommendation system. To increase user lifetime, you can integrate content recommendation machine into your service.
• Geolocation blocking. The world is huge and some countries may have specific restrictions. If you plan to run your service globally, consider adding this option.
• Video quality. Your subscribers will have different devices with different technical capabilities as well as the speed of the internet connection. This feature will help them to select the video quality to watch your content.
• MVP Development

Think of the MVP of your video streaming app like a journey from the theoretical into the real and visceral world. The must-keep feature list is a good set of functionality for the start. 

But how much does it cost to start a streaming service? Definitely, the final price depends on

• a number of features you want to have in your MVP and in the full version
• a number of supported platforms: web, iOS, and Android
• design specifications (Should it be a Netflix clone, or Netflix-style service?)
• a timeframe for the MVP and the whole project

You may get the in-house developer team or hire an outsourcing agency. Overall, the total project cost should be discussed with your tech team.

Video Streaming Requirements

It's no secret the performance of your service impacts subscribers' engagement. Pay attention to such aspects as

• Storage. Choose stable cloud storage for your content to provide seamless delivery.
• Network connectivity. Look closer at CDN (Content Delivery Network) to avoid overloading your servers.
• Security. Never overlook this aspect. Take care of SSL encryption, geo and domain restrictions, watermarking, and security token.
• Video streaming protocol. There are many protocols out there. (e.g., WebRTC, HLS, RTMP.) You can consult with the Apiko team. We are happy to offer guidance and hear any concerns you have.

Wrap Up

Regardless of where you are in a startup journey, you shouldn't dive headfirst into creating a streaming service like Netflix. In a nutshell, your steps may be like these:

• Begin with getting a clue of how the streaming service market works and sift through the niche options to narrow your hit list. 
• Go and discover the audience’s preferences and interests, so stick with the right content.
• Work out your business model and monetization. Prepare the desired feature set for your MVP. Strike a delicate balance between being a minimally viable product and a fully-functional one.
• Estimate the approximate budget you have, and select the outsourcing provider.

Frequently Asked Questions