Gone are the days of waiting for your favorite TV programs to air on cable TV. Today, we don’t argue about what to watch next on the TV but open Netflix on almost any device and catch-up with the favorite TV shows, movies, and documentaries on the go.
The OTT industry is currently taking the entertainment market by storm, and Netflix is unarguably the biggest contributor to this revolution.
In 2019, 85% of the US OTT subscribers accounted for Netflix alone, while Amazon stood at the second position with over 65% of the share. Even with the new streaming services joining the parade, Netflix remains on top of the global market. Events like the COVID-19 pandemic and compulsory home isolation during the lockdown only increased this share.
In fact, various platforms, including Netflix were forced to cut down on their streaming quality to cope with the added load on the servers.
Did you know that-
- There are over 200 million OTT subscribers in the US alone?
- Over 76.7% of the US content consumers rely on OTT for their entertainment?
Apart from this, a study by It Worth More found that 53% of their respondents would wait for a TV series to arrive on an OTT streaming platform because:
- They want to avoid advertisements.
- They like to binge-watch the entire season.
- They want to watch a series on-demand.
You may ask, what’s in it for you?
Well, there is a piece of good news for sure. The OTT streaming industry is on the boom, and this risen popularity of streaming platforms like Netflix means nothing but a business opportunity to aspiring entrepreneurs. If you have been thinking about how to start a streaming service, there is no time like now to realize that dream.
I know, what you are thinking. Starting a streaming business is not an easy job, and certainly not an affordable undertaking. Something that the likes of Netflix, Amazon, Disney, and Apple have been doing could never be cost-effective to replicate.
Let me tell you, it’s just a misconception.
This article will give you a quick walkthrough of how Netflix does what it does, and how it could be an easy undertaking to build such a platform without even programming knowledge or a fortune to invest in. You have to know the quickest way around your idea, and you could be sharing the globally projected OTT market worth $125 billion with the likes of Netflix, Hulu, Amazon, and others.
Let’s understand this by analyzing the business model of the most successful entity in this market –Netflix.
Overview of Netflix’s business model
Netflix’s business model presents an understanding of not just how to monetize an OTT streaming platform but also how to mold your strategies according to your target audience. Apart from the basic monetization channels, Netflix has pioneered an ecosystem of content production (via Netflix originals) that reduced its dependency on the production houses, most of which now have OTT streaming platforms of their own.
Netflix follows a subscription-based business model, the price of which varies according to regions of operation. For example, Netflix charges different subscription fees from subscribers in the US, Europe, and different parts of Asia. Moreover, the platform offers different types of subscription plans with added benefits. Here is a glimpse of the Netflix plans in the US and the respective benefits:
Apart from this, Netflix improvises its pricing strategies in different nations by offering some plans strictly according to the local audience. For example, besides the usual three plans, Netflix runs a cheaper $2.72 mobile-only plan in India considering the number of mobile users and affordability of a majority in the Indian population.
Yet another example of Netflix’s flexible business model can be seen in a campaign led in India, where it offered the entire platform free of cost for 2 days to everyone.
Building a Netflix like OTT streaming business
To build an OTT streaming business like Netflix, you need to focus on three major aspects:
- Business Strategy
- Content Strategy
- Development Strategy
We understood a major part of their business strategy in the section above. The biggest aspect left now is how they manage to encourage users to pay for streaming, as one can still browse a lot of OTT content on other more affordable or free platforms?
The answer lies in Netflix’s value proposition, which is a combination of four major aspects:
- Accessibility: Apart from flexible pricing, Netflix facilitates accessibility by delivering optimized content almost across every popular platform: Web, Android phones, Android TV, Apple phones, Apple TV, Apple iPad, Samsung TV, Roku TV, and all major Linux based TV Operating systems.
- Original content: Netflix has been producing or gaining exclusive rights of content from third-party publishers. Some content on Netflix cannot be found on any other platform. Besides, it spends a fortune to keep exclusive rights of bests of content on its platform.
- No Ads: Nobody likes to see ads. By offering an ad-free experience, Netflix manages to attract a whole lot of consumers who are ready to pay a premium to enjoy streaming without ads.
- AI–based recommendation: Netflix’s AI-based recommendation algorithm is one of the bests in the industry. It tracks users’ watching behaviors and recommends content according to their tastes. In this way, it manages to hook the users up with increasingly tailored content from a repository of thousands of titles.
So if you are planning to build a platform like Netflix, you need to take care of three major aspects first:
- Define your niche: If you can’t compete with the kind of content that Netflix offers, avoid going eye-to-eye with it or any such name in the market. Just pick a niche market, and try to establish a name within it. For example, you can choose from niches like Education, Documentaries, Fitness, Regional Entertainment, E-Sports, etc.
- Leverage on the gaps: Even with the bests aspects, Netflix and other popular platforms are not perfect. They do miss out on one or multiple verticals globally, and most of the time regionally. You need to find these pain points of the users and offer a solution. For example:
- Netflix might be streaming great international content, but it might not have enough local content for your region.
- Netflix forces the users to stream in the best available quality, but you can give your users an option to choose the streaming quality manually.
- Netflix allows a maximum of 4 screens at a time, but you can offer more screens at a cheaper rate.
- Different monetization models: While the pure subscription model works like a charm for Netflix and many others, that doesn’t mean it will work for every other platform or region. Based on the level of your offerings, affordability of the target users, and required investment in content licensing, you can adopt other monetization channels, too:
- Ads: You can adopt an Ad-based model to make the platform free to the users while making money from Ads.
- Freemium: You can offer a freemium model where you can offer a subscription model to those who do not want Ads and Ad-model to those who want to stream free of cost.
- Rent or PPV: Some types of content produce excellent results with the pay-per-view (PPV) model. For example, streaming of a live sports telecast. People would love to pay to watch their favorite sports events live. This model has particularly worked like a charm in the COVID-19 pandemic, where many new movies were released on OTT platforms with pay-per-view model or renting models.
Yet another crucial entry in this guide of how to start a streaming service like Netflix is content sourcing. If you have not already thought about it, you better sort it out before moving to the next phase. After deciding your niche, you need to look for content that caters to it.
There are mainly two ways to ensure content availability:
- Produce in-house content: Just like Netflix originals, you can produce in-house content.
- License from distributors: There are distribution companies that sell streaming rights of content from multiple publishers. Based on your niche, you can pick relevant content and purchase their streaming rights.
So far we have covered the business and content strategies to start a platform like Netflix. Now, let’s understand how to build an OTT streaming platform like Netflix. There are two major ways to acquire such a platform for your business:
You can develop the platform from scratch: You can develop your platform by yourself, but it will take a lot of skills and time to build it all by yourself. Alternatively, you can hire an in-house team, or outsource a development company to do it for you. In either of the cases, it takes a team of 10 resources 30 days to build such a website. Taking the US development rates as $150/hour, you would be paying at least 360,000 for the development, testing, and deployment of a minimum viable product.
Take the smart route with a Netflix clone script: A Netflix clone is a turnkey, ready-made script that allows anyone to set up a platform like Netflix without coding everything from scratch. Based on the Netflix clone you purchase, you can get a ready-made website, admin panel, mobile apps, and essential APIs out of the box. All you have to do is install the script on your web server, customize the front-end according to your brand identity, and that’s it. You can get a decent Netflix clone for as low as $200 (website only), and $700 with mobile apps. Just Google it, you will find tons of sellers for Netflix clone scripts.
I think the second option is the best way to get an MVP. Most Netflix clone scripts are available with open source-code, which imply that you can always customize them, or add new features in the future. You can save your $360,000 while paying for just the customizations you need.
Told you –you don’t have to be a tech wizard to build a Netflix like platform; just the knowledge of the other ways around is important.
Nevertheless, the choice is yours. Developing the platform from scratch is not a bad idea either, it’s just not suited to every entrepreneur’s pocket, but this shouldn’t prevent a business aspirant from trying out their ideas in the actual market. So, take your pick and get going. All the best.