The Ultimate Guide to Start a Streaming Service Like Netflix -Business & Revenue Model to Consider

Modern people these days entertain themselves with movies, series, music, and other streaming content as well. Numerous ways help you to make your boring channels for hours to search for something interesting.

Thanks to modern-day technology, you can always be able to search for something worth attention. And if you are looking for the perfect service to watch streaming content in H.D. quality without annoying advertising, then Netflix is the best option to choose.

Today, Netflix’s streaming service is attracting T.V. viewers around the globe. But do you know the secret of streaming services like Netflix’s popularity? Access to millions of movies and programs and different service packages can meet any taste.

They can decide to build a platform similar to Netflix with additional features to beat other competitors in the market. Like Netflix, online video streaming has gained immense popularity; let’s check the cost to create a Netflix clone, integrated features, business & revenue model, and much more.

What is Netflix?

Netflix is an American over-the-top media service. The original programming production company provides subscription-based video on viewers’ demand from a library of television series and films. Netflix plays a crucial role in independent film distribution. As of 2021, Netflix had 73.95 million subscribers, including 72 million in the U.S. and Canada.

The streaming service platform offers services worldwide except mainland China, North Korea, Syria, and Crimea. Netflix is a member of MPA (Motion Picture Association). Founded in 1997, Netflix was launched by Marc Randolph and Reed Hastings in California, Scotts Valley, and many more.

The initial business model of Netflix includes DVD sales as well as a rental by mail. Still, Hastings abandoned the sales a year after the company’s originating to concentrate on the initial DVD rental business. In 2017, Netflix elongated its business by launching streaming media and retained the Blu-ray and DVD rental business.

In 2010, the company successfully expanded its streaming service internationally and is now available in Canada, followed by the Caribbean and Latin America. In 2013, the video streaming platform entered the content production sector, debuting its first series, “House of Cards.”

Later in 2016, the platform expanded its service to 130 countries and now operates in 190 countries. In 2021, the company gained the position as the 8th most trusted streaming service globally. Netflix was the top-performing stock in the stock market index, with an average return of 3,693%.

Netflix Business Model: Explore the Success Story of Streaming Service Right Away!

Leading video streaming service platform, Netflix launched in 1997 has started as a DVD-by-mail company. Netflix has 118 million paid subscribers; around 50% of households use the service. In 1998, the streaming platform launched a web page, later changed from a “Pay Per Rental” to a “Monthly Subscription” model.

In the 2000s’, the streaming service focused on online streaming services and paid off. Later the video-on-demand platform introduced streaming services that are loved and used by millions of users today.

The streaming service is famous for its television classics, movies, and original shows as well. The revenue is forecasted to increase to $17.63 billion in 2019.

The business model is the way you monetize your business. It’s about how you engage the audience; the streaming service business model helps develop an effective ecosystem, making it easier to scale upwards in the future. Netflix operates on the subscription-based business model. With the global expansion, the business model enables the company to scale up steadily and quickly.

Netflix Value Proposition

The streaming platform includes four different elements:

• Accessibility;
• Original content;
• No ads;
• Recommendation algorithm.

Accessibility

Netflix makes it easier for you to deliver high-quality video across different operating systems, devices, and other platforms. The video streaming service has maximized its viewer’s base; it makes it easier for viewers to enjoy their favorite content through tables, browsers, and other devices.

Original Content

Netflix provides access to third-party publisher shows and exclusive programs as well. The service makes it easier for viewers to view in-house shows not available on any other platform.

No Ads

Free account users come across irritating ads much often. But if they choose to go with a premium subscription, they can enjoy online streaming content without ads. Additionally, the service motivates users to purchase a subscription.

Recommendation Algorithm

Netflix makes it easier for users to stream thousands of shows, the recommendation algorithm collects increased engagement and relevant content with the platform.

Netflix has consolidated its presence in the U.S.; with the international expansion, the streaming platform invests resources to leverage traction in different countries. International competition is not as easy as you think; if you’re developing a streaming platform like Netflix, you need to consider different aspects.

How Does Netflix Make Money? Revenue Model In A Nutshell

With simple packaging and three subscriptions, these include:

• Basic;
• Standard;
• Premium.

You can quickly stream different series, shows, and movies from the Netflix library. Presently, the subscription prices differ from a base plan to a premium plan that ranges between $7.99 to $15.99.

Business Segments

The business segment of Netflix has different financial logic and requires a separate strategy. Netflix revenue was around $11 billion in 2017, with a tremendous increase compared to 2013, when the revenues were around $4 billion. Netflix has over 192.95 million paid subscribers as of the second quarter of 2020.

The company operates on three business segments, that is:

• Domestic streaming;
• International streaming;
• Domestic DVD.

Domestic Streaming

Monthly subscription fees help generate revenue from the services consisting solely of video streaming content to members in the U.S.

International Streaming

Revenue from monthly fees for services mainly consists solely of video streaming to those outside the U.S.

Domestic DVD

The revenue from membership fees for services solely of DVD by mail.

The video streaming platform is very profitable, but it operates on negative cash flow just because of upfront cash paid for licensing and original content production. The primary revenue source is a subscription; most subscribers can select any subscription model at their convenience.

How to Create Streaming Service Like Netflix

The development of streaming services like Netflix is not as challenging as you think. You need to go through a few steps as listed below.

Find Your Niche

Promptitude makes it waste; you do not require everything speedily. You must determine the type of streaming, video streaming service is a general concept, and you must understand what niche in the area you will select. It’s essential to make a smart choice, especially when developing an app similar to Netflix.

Develop Content

When you are searching for how to create a video streaming service like Netflix, it becomes crucial for you to determine what content the platform will have. It depends on content how attractive your streaming service will look; choose how you will update the content, whether you will update it weekly, monthly, or daily. You need to consider various issues to engage more viewers and make them pay for the service.

Get License

You need to follow the rules and guidelines and get licenses for different content you plan to stream. Mainly you have two ways to get the license for performance, that is:

• Contact copyright holder;
• Rent streaming content from a distributor.

Both options are perfect; most things depend on individual particularities and opportunities for each option. If you want to rent streaming content from an authorized distributor, mainly there are two major distributors:

• SWANK Motion Pictures;
• Motion Picture Licensing Corporation (MPLC).

If you go for the second option, then contact a studio holder for specific content.

Choose Best Platform

You need to search for information regarding platforms; you must create a streaming service like Netflix. Most users spend more time using the smart device; hence make sure that your streaming platform supports all the devices. Want to get your doubts about the development platform and the cost related to it solved? Don’t waver to get in touch with us at [email protected].

Choose Business Model

Launching a new business resembles the business model of Netflix, but it doesn’t guarantee immediate success for your streaming business. Want to become a competitor to Netflix? Then create an app like Netflix, and you are all set to make a profit.

Technology Stack for Streaming Service Like Netflix

Find the list of valuable tools that you want to use for development. You can take the support of an on-demand company like us. Check how we cater to streaming app development needs right away. If you are interested to start a streaming service like Netflix, let’s discuss!

Final Words

Netflix has undoubtedly become a streaming business leader, and the company is investing in technological innovation and scaling continuously. Hence while developing streaming services like Netflix, you can adapt its business and revenue model, working strategy, and much more.

You have to select your niche, technology stack, and much more. Additionally, you must consider a few industry-specific needs to become a winner. Once after having a perfect picture, take the support of a development company that helps you bring your idea into reality.

Frequently Ask Questions

What is the first step in starting a streaming service like Netflix?

Starting a streaming service like Netflix begins with planning your business model and identifying your target audience. Key steps include:

• Market Research: Understand the competition and determine your niche (e.g., movies, TV shows, documentaries, or specific genres).
• Licensing Content: Secure content rights from studios, content creators, or produce your own.
• Technology Infrastructure: Choose the right platform, build a secure, scalable streaming app, and ensure content delivery networks (CDNs) for smooth video playback.
• Monetization Strategy: Decide on your revenue model (subscription, ads, pay-per-view, etc.) and set competitive pricing.

What are the different business models for a streaming service like Netflix?

There are several business models you can adopt for a streaming service:

• Subscription-Based Model (SVOD): Customers pay a recurring fee to access the entire library of content. This is the model Netflix uses.
• Ad-Supported Model (AVOD): Content is free, but users watch ads. Hulu and Peacock use this model.
• Transactional Model (TVOD): Users pay per view or per content rental. iTunes and Amazon Video adopt this.
• Freemium Model: Offer a free basic plan with ads, and charge for premium, ad-free access (e.g., Spotify’s model).
• Hybrid Model: A combination of subscription and ad revenue, allowing different access tiers (e.g., Hulu).

How much does it cost to build a streaming service like Netflix?

Building a streaming service involves several cost components:

• Content Licensing: Depending on your content acquisition strategy, licensing popular movies or shows can be expensive.
• App/Platform Development: Building a custom streaming platform can cost anywhere from $50,000 to $150,000 or more, depending on the features and complexity.
• Content Delivery Network (CDN): Hosting and streaming high-quality videos require scalable server infrastructure, which can cost $10,000 to $50,000 annually.
• User Interface Design: Creating an intuitive and appealing UI could cost $10,000 to $30,000.
• Marketing: Initial marketing campaigns, branding, and influencer partnerships can range from $20,000 to $100,000 or more.

The overall cost can range from $100,000 to several million dollars depending on scale and content acquisition.

How do I acquire content for my streaming service?

Content acquisition is a critical step in the process. There are several ways to acquire content:

• Licensing Agreements: You can negotiate deals with studios or content creators to license their films, TV shows, and original programming.
• In-House Production: Produce your own exclusive content, similar to Netflix’s “Netflix Originals.”
• User-Generated Content: Allow content creators to upload their own videos (e.g., YouTube or Vimeo model), although this requires moderation and management.
• Content Aggregation: Partner with existing platforms or distributors to aggregate content from multiple sources.

What are the key features to include in a streaming service like Netflix?

To offer a seamless user experience, you should include:

• User Registration and Profiles: Allow users to create profiles and personalize their recommendations.
• Search and Recommendation Engine: Use AI-driven recommendations to suggest content based on viewing history.
• Multi-Device Support: Ensure compatibility with different devices (smartphones, tablets, smart TVs, etc.).
• Playback Controls: Include features like pause, rewind, fast-forward, and subtitles.
• Offline Viewing: Enable users to download content for offline viewing.
• Payment Gateway Integration: Offer multiple payment methods for subscriptions or pay-per-view options.
• Ratings and Reviews: Let users rate and review content to help others make informed decisions.

How do I ensure smooth video streaming and high-quality playback?

To ensure smooth video streaming:

• Content Delivery Networks (CDNs): Use CDNs to deliver content efficiently by storing video files in multiple locations worldwide, reducing buffering and latency.
• Adaptive Streaming: Implement adaptive bitrate streaming (ABR) so that video quality adjusts based on the user’s internet speed.
• Compression and Optimization: Compress video files to minimize buffering and reduce load times while maintaining high-quality visuals.
• Testing: Conduct extensive performance testing to identify any issues with streaming speed, resolution, or playback.

What are the monetization strategies for a streaming service like Netflix?

Here are common monetization strategies:

• Subscription-Based Model (SVOD): Offer users unlimited access for a recurring fee.
• Ad-Supported Streaming (AVOD): Provide free content but show ads to generate revenue.
• Pay-Per-View (TVOD): Charge users for individual pieces of content, like renting or buying movies.
• Freemium Model: Offer basic content for free and charge users for premium features like ad-free viewing or exclusive content.
• Affiliate Marketing: Include affiliate links for related products and services, earning a commission on purchases made by users.

How can I protect my streaming content from piracy?

To protect your content:

• Digital Rights Management (DRM): Use DRM technologies to prevent unauthorized copying, redistribution, or access to your content.
• Watermarking: Embed visible or invisible watermarks in videos to track pirated copies.
• Encryption: Encrypt video files to ensure they can only be accessed by authorized users.
• Geo-blocking: Restrict access to certain content based on location to comply with licensing agreements.
• Legal Agreements: Include clear terms and conditions that prohibit piracy, and take legal action against violators when necessary.

How do I market my streaming service?

Effective marketing strategies for your streaming service include:

• Search Engine Optimization (SEO): Optimize your website and app for organic search visibility.
• Social Media Marketing: Use platforms like Instagram, Facebook, and Twitter to promote content and engage with users.
• Influencer Marketing: Partner with influencers to spread the word about your service.
• Free Trials and Discounts: Offer limited-time free trials or discounts to encourage users to sign up.
• Content Partnerships: Collaborate with content creators or other platforms to promote exclusive deals.
• Email Marketing: Send personalized recommendations, promotions, and updates to your subscribers.

What are the ongoing costs of running a streaming service?

The ongoing costs for a streaming service include:

• Content Licensing or Production: Regularly renewing licensing agreements or producing original content.
• Server and Hosting: Ongoing costs for hosting content, CDN usage, and data storage.
• Marketing and Promotion: Continuously spending on advertising and promotional efforts.
• Customer Support: Providing customer service for troubleshooting and inquiries.
• Platform Maintenance: Regular updates and bug fixes for your website or app.