Retailer Daily

Netflix Aims for Streaming Success

In a recent post on the Netflix blog, Netflix Chief Product Officer Neil Hunt says the online consumer entertainment retailer is trying for “consistent excellence” in its streaming delivery service. In the blog, Hunt says that CDN (content delivery network) servers distributed around the US distribute streaming content from Netflix, allowing data to reach customers via regional and metro networks that have higher bandwidth than internet backbones. As a result, Hunt says that congestion and slowdown may vary by internet regions, which do not always correspond to geographic regions, or even by individual ISPs in the same region. In addition, Hunt says that different titles or types of content slated for different playback devices may travel different paths and experience different bottlenecks. He also says that Netflix engineers are working to multisource all forms of content for all playback devices for the end of the year, which will reduce overall congestion, and that customers should realize levels of internet traffic in an individual home can affect streaming performance. Hunt’s blog reassurances about Netflix’s streaming operations come at a time when the retailer is undergoing rapid growth of both its traditional DVD mail order service and streaming service. In January 2009, Netflix reported a Q4 profit increase of 45%, with subscriber acquisition costs dropping 23%. Netflix ended the year 2008 with about 9.3 million subscribers, and projected it will have 10.1 to 10.3 million subscribers by the end of 2009, a growth rate of approximately 11%.The retailer did not break out streaming growth statistics but said the category was “gaining momentum” in its earnings release. Netflix launched its streaming delivery service in January 2008, according to the Associated Press. In addition, reports from February 2009 indicate that Netflix is may shift from mailing DVDs and focus on streaming. Netflix has been expanding its library of online titles and enabling an increasing number of playback devices to accept its streaming content.