Netflix and AWS – A Case Study that Stands the Test of Time

Summary:

Table of Contents

Introduction

Netflix was founded in 1997 by Marc Randolph and Reed Hastings. Initially, it was a per-rental model for DVDs. However, by 2000, the company shifted its focus to flat-fee unlimited rentals, including rentals without due dates, late fees, shipping and handling fees, or per-title rental fees.

Later, in 2007, Netflix introduced video-on-demand online, venturing into streaming media. To support its streaming needs, Netflix built two data centers in proximity. Nevertheless, their efforts to develop and operate data centers failed to meet the spiky demand of their users. Whenever they felt like they had everything under control, something would go down, and the whole process had to be started again. Yet the worst hasn’t stuck.

While running relational databases at its data centers, disaster stuck. A sudden data center failure shut down all Netflix operations, stopping DVD shipments for three days. The company faced challenges in turning Netflix into a world-class data center operation or adopting the Cloud.

The concern was genuine, challenges were complex, and solutions seemed out of reach. Netflix was growing fast at that time. Thousands of videos and millions of customers were already generating vast amounts of data. It was impossible to rack servers in their data centers and too fast enough to handle the ever-increasing demands and volumes. However, the Cloud was an option that would allow them to add as many virtual servers as they wanted and add petabytes of storage within minutes.

And Netflix Decided to Move to the Cloud

Migration to the Cloud was a clear choice. It became more of a necessity rather than an option. Netflix turned to Amazon Web Services (AWS) for a more scalable and cost-effective cloud infrastructure despite Amazon being a competitor. Netflix became a standout customer for AWS.

However, the move wasn’t a simple lift-and-shift; it demanded a complete overhaul of Netflix’s traditional infrastructure. Rather than transplanting monolithic systems to AWS, which would have merely replicated old data center issues, Netflix opted for a transformative approach. They embarked on rebuilding their technology within AWS, ushering in a fundamental shift in how the company operated.

Transitioning from traditional data centers to the Cloud was driven by the need for enhanced reliability. While both approaches have faced challenges and occasional outages, the move to Cloud Computing has consistently improved overall availability. The inherent redundancy measures in Cloud-based systems are pivotal in mitigating failures. Despite the few bumps, Cloud Computing empowers Netflix to navigate failures without compromising the member experience.

The Revolutionary Partnership Between Netflix and AWS - Why Netflix Choose AWS?

The union of Netflix and AWS stems from a strategic shift – moving away from vulnerable, vertically scaled systems in their data centers (like relational databases), Netflix decided to move towards the robust, horizontally scalable, and distributed systems offered by the Cloud. AWS emerged as the preferred cloud provider due to its expansive scope and rich array of services.

The decision was a crucial step for Netflix and AWS to globalize its cloud footprint without the need to build and maintain its data centers, a task that the limitations of its existing infrastructure could have improved. The significance of Netflix and AWS relationship aligning for innovation, speed, and top-tier entertainment delivery is evident. AWS provides essential computing, storage, and infrastructure support, enabling Netflix to rapidly scale, operate securely, and meet global capacity demands.

Here are some of the reasons why Netflix and AWS decided to come together,
Scalability and Agility: AWS migration enabled Netflix to scale resources up and down to meet changing demands, allowing them to respond faster to newer opportunities.
Global Reach: AWS migration allowed them to leverage their world-class infrastructure for delivering their content to worldwide users even during low latency.
Cost Efficiency: By migrating to AWS, Netflix knew they had to pay only for the resources they intended to use, eliminating the upfront cost of physical hardware and ongoing maintenance.
Reliability and Security: The robust infrastructure offered by AWS and built-in security features ensure high data availability and data protection.
Focus On Innovation: By offloading infrastructure management to AWS, Netflix, in a way, freed its internal resources so it can dedicate more time towards core business and innovating new products.
Wide Range of AWS Services: AWS Migration gave Netflix access to various AWS tools, from computing, storage, and analytics to machine learning and artificial intelligence.
Reduced Downtime: Compared to their own data centers, they knew AWS would offer a more reliable and resilient infrastructure, minimizing the risk of outages and enhancing service continuity.
Integration Capabilities: AWS has tremendous compatibility to integrate with various third-party and open-source tools, technologies, and APIs that well align with Netflix’s interests and future growth initiatives.

AWS Services Used By Netflix

After Netflix and AWS partnered, it received accesss to some of the intricate architecture on AWS encompassing a hybrid system, seamlessly integrating versatile services to fuel its streaming capabilities. Let’s understand some key AWS services used by Netflix to power up its streaming operations:

Amazon Kinesis Data Streams (Amazon KDS)

Netflix exploits the power of KDS to accumulate terabytes of data from a myriad of sources effortlessly. This treasure trove of data is instantly made available for real-time analytics and is stored in Amazon S3 buckets for further use. The applications of this copious data extend to enhancing customer experience and optimizing referral programs.

AWS Lambda

Since Netflix and AWS came together, AWS Lambda has become Netflix’s secret weapon to craft and self-manage architecture driven by rules. To pursue excellence, time savings, and efficiency, Lambda replaces outdated procedures. It streamlines processes, especially in data manipulation, backup decisions, and security checks. It also automates security measures and enforces compliance during instance setup and response to unauthorized access.

Amazon Route 53

As Netflix caters to the streaming demands of more than 190 countries, it longs for a robust DNS infrastructure. By leveraging Amazon 53, Netflix was able to offer a seamless viewing experience to worldwide customers by efficiently routing traffic to alternative regions in case of server failures, region overloads, or unforeseen disruptions.

Amazon Redshift

After a successful AWS migration, Netflix started using Amazon Redshift to rapidly analyze vast amounts of data, refine content and recommendations, and optimize streaming. Due to the columnar storage, it becomes easier to run complex queries and derive meaningful insights.

Amazon Machine Learning (AML)

Having understood the importance of user preferences and delivering personalized content, Netflix started using Amazon Machine Learning to personalize the viewer experience with a state-of-the-art recommendation engine. Netflix leverages AML to analyze user behavior, viewing patterns, and content preferences and customize Netflix’s vast library to suit individual tastes.

Amazon Kinesis

Kinesis powers Netflix’s real-time analytics by ingesting and processing diverse streaming data, including user interactions, content consumption patterns, and system metrics. It helps Netflix gain actionable insights for adapting content recommendations, improving streaming quality, and enhancing user satisfaction promptly.

Amazon Elastic Compute Cloud (EC2)

Netflix wanted to achieve scalability at scale, and Amazon Elastic Compute Cloud (EC2) helped achieve the desired scalability. Netflix’s scalability relies on EC2’s flexible compute capacity, ensuring a smooth streaming experience. Custom created EC2 instances power computational engines behind content delivery, transcoding, and other compute-intensive tasks.

FUN FACT:
In 2000, Randolph and Hastings faced a cash crunch and offered to partner with Blockbuster. Blockbuster was making $6 billion a year at the time, while Netflix made $5 million. The Blockbuster executives laughed during the pitch. Today, Blockbuster is out of business, and Netflix is worth $259 billion. The Blockbuster team didn’t know as much as they thought.

A Risk-Free AWS Migration Required 7 Years to Complete: What Did Netflix Achieve?

Netflix’s move to the Cloud in 2008 was spurred by a disruptive event, leading to a seven-year massive overhaul for a complete AWS migration despite having a focused cloud migration strategy. Rather than directly transferring existing systems, Netflix chose to rebuild its software, leveraging a cloud network that allows the construction of reliable services from inherently unreliable but redundant components.

Netflix’s strategic approach and robust backup systems demonstrate a commitment to ensuring uninterrupted service, even in the face of potentially catastrophic events.

The Amazing Netflix Stats Post AWS Migration: 260.28 million subscribers, $33.724 billion in revenue, streaming in more than 190 Countries…

Although Netflix took seven years to complete its AWS migration process, the results it achieved afterward are simply excellent.

• Netflix had a massive 260.28 million paid subscribers globally by Q4, 2023.
• The company earned $33.724 billion in revenue in 2023.
• Netflix holds a 7.7% share of US screen time, just below YouTube’s 8.5%.
• A balanced gender breakdown of 51% women and 49% men comprise Netflix users.
• On average, Netflix customers spend 3.2 hours daily watching content.
• In the US, 47% of the population favors Netflix.
• The Slovakian library boasts around 8,427 titles, making it the largest in the world for Netflix.
• In 2023, Netflix allocated $13 billion to content production, with a $17 billion budget forecasted for 2024.
• Stranger Things 4 set a record with 1,838,000,000 hours viewed, becoming the most-watched Netflix series.

Lessons Learned From Netflix: