IS Principles

Netflix: How Does it Work?

INF220: IS Principles

The year is 1997, Beanie Babies and baggy jeans were the “thing”. Gas was under $2.00 a gallon, and video rentals were a way to enjoy relatively new releases in the comfort of your own home. Stores like Blockbuster Video, Hollywood Video and Movie Gallery were the places to go to pick up your weekend entertainment, but that was soon to change. Not only were VHS tapes being overrun by the new development of the DvD, but the internet had also sparked a new way to watch movies from home. This is where the idea of Netflix came from. Founders Reed Hastings and Marc Randolph thought it would be even more convenient to the average person to be able to stay in the house and have the movies delivered to them. After years of development, in 1999 “Netflix began offering an online subscription service through the Internet. Subscribers chose movie and television titles from Netflix’s Web site; the shows were then mailed to customers in the form of DVDs, along with prepaid return envelopes, from one of more than 100 distribution centres. Although customers typically rented for a flat monthly fee as many movies per month as they wished, the number of DVDs in their possession at any one time was limited according to their subscription plans. Netflix had tens of thousands of movie titles in its catalog.” (Hosch, 2019). The Netflix we know today has since added much more to their original concept of offering DvD rentals and has primarily shifted to online streaming services with original programming for a monthly fee. “In 2007 Netflix began offering subscribers the option to stream some of its movies and television shows directly to their homes through the Internet. For most subscription plans, the streaming service was unlimited. Netflix subsequently partnered with manufacturers of various consumer electronics products, including video game consoles and Blu-ray Disc players, in order to enable its videos to be streamed over an Internet connection to those devices. In 2010 Netflix introduced a streaming-only plan that offered unlimited streaming service but no DVDs. Netflix then expanded beyond the United States by offering the streaming-only plan in Canada in 2010, in Latin America and the Caribbean in 2011, and in the United Kingdom, Ireland, and Scandinavia in 2012. By 2016 its streaming service was available in more than 190 countries and territories. Netflix had announced in September 2011 that it would split its streaming and mail-based services, with the latter to be called Qwikster, but abandoned the planned split a month later, citing an outcry from its subscribers. While its streaming services became the biggest revenue generator—with more than 130 million subscribers in 2018—the rental division remained profitable.” (Hosch, 2019). With all of these innovations in at-home viewing, one concern still remains. How does Netflix keep their business running, how secure is it and how do they keep their information safe? Within this document, this question will be addressed.

Netflix has had to adapt to many technological changes throughout the years to accommodate their customer base. Currently, their choice in information systems is adaptive bitrate streaming technology. Adaptive streaming technologies share several critical aspects. First, they produce multiple files from the same source file to distribute to viewers watching on different powered devices via different connection speeds. Second, they distribute the files adaptively, changing the stream that’s delivered to adapt to changes in effective throughput and available CPU cycles on the playback station. Third, they all operate transparently to the user, so that the viewer clicks one button (rather than multiple buttons as with the movie trailer experience where users select the bitrate and video quality beforehand) and all stream switching occurs behind the scenes. The viewer may notice a slight change in quality as the streams switch, but no action is required on his part.” (Oser, 2011). Part of the reason why Netflix is so successful is because they are consistently trying to upgrade their quality and capabilities to give their customer the optimal streaming experience.

“Netflix said that a typical episode of a show like Jessica Jones, which is roughly an hour long and is captured in 6K resolution, weighs in at 293GB of raw, unedited footage. That amounts to about 750 Mbps of data, which would basically kill your internet plan if you streamed it before it was compressed. The company says it used to be able to deliver content with “an enjoyable quality” at 750 Kbps, but last year it started using a new encoding framework that shrunk that to a mere 270 Kbps. In the real world, that means that if you have a 4GB data plan, you can watch 26 hours of Netflix per month, up from just 10 hours before.” (Alvarez, 2018).

Because the commitment of Netflix runs so deep, they actually monitor and update their services frequently, sometimes two times a week! With all of these changes, is there any room for improvement? The answer to that is “Always”. Chris Goss, Director of Studio Technology says; “One of those challenges is the fact that traditional IT has always been seen as ancillary, not integral to our process, [but] there’s all this room for growth and innovation in entertainment.” (Alvarez, 2018). One of these innovative developments that Netflix has been able to implement is the predictive viewing algorithm. It is so accurate that it is almost as if Netflix is spying on your every thought. The truth is, it may be doing that and this is how it does it. Netflix actually has a staff of over 800 engineers that “spy” on your patterns of viewing in addition to this there are a number of Machine Learning algorithms based on your personalized ranking, searches, similar movies and other key elements. This can become quite labor intensive so these algorithms have been given different things to recognize. The personalized video ranker or PVR is one such algorithm. “This algorithm orders the entire catalog of videos (or subsets selected by genre or other filtering) for each member profile in a personalized way. The resulting ordering is used to select the order of the videos in genre and other rows, and is the reason why the same genre row shown to different members often has completely different videos.” (GOMEZ-URIBE & Hunt, n.d.). Another one of these algorithms is the Top-N Video Ranker, which is similar to the PVR, but offers a more optimized suggestion that narrow its recommendations to “look only at the head of the catalog ranking that the algorithm produces, rather than at the ranking for the entire catalog (as is the case with PVR).” (GOMEZ-URIBE & Hunt, n.d.). These algorithms also offer a broader spectrum suggestion by pooling the most popular selections from Netflix’s entire viewing audience. The “Trending Now” feature identifies “two types of trends that this ranker identifies nicely: (1) those that repeat

every several months (e.g., yearly) yet have a short-term effect when they occur, such as the uptick of romantic video watching during Valentine’s Day in North America, and (2) one-off, short-term events, for example, a big hurricane with an impending arrival to some densely populated area, being covered by many media outlets, driving increased short-term interest in documentaries and movies about hurricanes and other natural disasters.” (GOMEZ-URIBE & Hunt, n.d.). Without going in to all the features that these algorithms provide, most of these are all driven by the individual viewer’s habits and choices and are unbelievably accurate at predicting what you want to watch at any given time. A main concern with this type of algorithmic tracking is security and privacy. Not only do we have the conspiracy theorists that have already come to the conclusion that they are being watched and listened to through their televisions, computers and phones, there are plenty of news stories out there that have been fueling that concern in recent months. Data breaches have occurred in the most “secure” of servers like OPM, FEMA, Georgia Tech and so many others, so how has Netflix been able to maintain their security and are they developing more ways to continue that trend?

Netflix’s infrastructure is a cloud based entity, so of course, there are some concerns when it comes to security and privacy, not only for their service itself, but for their customers as well. Per Mike Kail, VP of IT, “When Public Cloud (IaaS) and/or SaaS becomes your infrastructure, forcing you to think differently with respect to securing a non-existent or elastic perimeter.  As a result, Identity and Data Access become the new Security Perimeter.  One then thinks about how to provide security within this construct, which requires a new way of approaching the problem.” (Kail, 2017). Netflix has developed several systems that have been monitoring, preventing and combating any security and privacy concerns that could pop up. “Security Monkey is a system that Netflix built and open sourced in June 2014 that looks internally at the security of configurations. Since Netflix operates its infrastructure within Amazon Web Services, the tool continuously monitors and tracks AWS security configurations. It has a rules engine that can let Netflix know when things change and someone needs to look at it. It might be that a developer created a firewall rule that allowed access from a suspicious IP address or created an access control policy on a storage resource that might provide world readable access.” (King, 2015). This is not Netflix’s only line of defense. They have become quite savvy when it comes to protecting their server as well as their customer data base. “Scumblr, can search websites such as Pastebin for leaked names and passwords or look for compromised Netflix accounts that criminals try to sell on eBay. It then reports back findings to Netflix so they can help customers regain control of their accounts. Scumblr is essentially a Web application that lets Netflix create searches of sites like Google, Facebook, Twitter and eBay that can run automatically, similar to Google Alerts. Scumblr works with a tool called Sketchy that collects screenshots and test content from potentially malicious sites. Sketchy lets engineers collect data while isolating their systems from getting infected by malicious software that may occur on these sites.” (King, 2015). Most recently, Netflix added another weapon to their arsenal with the implementation of Fully Integrated Defense Operation (FIDO). “When FIDO receives a security alert from a firewall or intrusion detection system, the system tries to find more context about what’s happening. It will check internal systems to see if something is targeting an executive, domain administrator or the PCI zone, the most secure part of the network that handles financial transactions. The system also checks with outside threat information to determine if it’s a false positive or a more pervasive problem. FIDO then correlates that information, scores the threat and then takes further action, whether it’s emailing an engineer or disabling an employee account.” (King, 2015). Though you may feel that you are just a small fish in a big pond, there is always a chance that you may be that small fish that gets hooked through a data breach or through identity theft. Netflix may not sell your personal information, nor will they intentionally let their security protocols lapse, but as far as personal privacy and security go, the best suggestion to prevent a possible leak in your privacy when it comes to your account is password protection. Password protection may sound like a basic and cliché suggestion, but believe it or not, one of the tricks that hackers have is to steal your username and password just to sell it to someone else who can wreak havoc on your life through your social media, shopping sites and yes, even your Netflix account. There are many tutorials on how to generate a password and even some programs that will do it for you so there is really no excuse to be taken advantage of by not keeping your passwords safe in all areas of your online life. Choose a secure password, and change it often to keep the hackers at bay.

However, in the world of internet security, nothing is 100% reliable, there is always a risk of data breach or identity theft at any time. The only suggestion that can be made for improvement in this arena is to remain hyper-vigilant. No matter the development, there are always predators looking for a weakness that they can expose. Never fear though, Netflix is constantly upgrading their security protocols to keep you protected. I am not sure that there is much to suggest that Netflix changes or does when it comes to their IT and security protocols. It seems that they have been on the cusp of innovation and development since their establishment. Unlike most streaming services like HULU and Amazon, Netflix has always been a hybrid of tech and entertainment. Upon his hiring, Mr. Kail decided to keep up with every aspect of IT and IS by implementing a strong vision for innovation. He states, “My feeling is that IT should have always been both engineering/dev and data focused, and I believe the industry shift over time will make that a stricter requirement for every company. Everyone doesn’t need to be a full-stack developer, but having the skills to glue together services via APIs will be necessary. Fundamentally, understanding the power of data and knowing how to unlock and expose it will be a key trait.” (Kain, 2017).

The vision of Mr. Kain and the rest of the Netflix team is to provide the most relevant, secure, and best quality entertainment platform and provide that to their customers for years to come. With this vision, how does this strategy impact the world as a whole? Well, again, Netflix has been working diligently to provide their services to countries all over the world and not just the United States. Their international streaming service was launched in 2017, expanding their subscriber base “by nearly 20 million new customers globally in the full year after announcing last January its plan to expand to some 190 countries to become a “global television network.” (“Netflix adds 7 million subscribers in global expansion,” 2017).

Netflix certainly has a good thing going and it doesn’t appear that they are going to slow down anytime soon. Despite the monthly costs for the service rising every 2-3 months, it is still the better option for television viewing. Currently the average rate for basic satellite service per month is between $40-$135 and cable costs can range from $20-$200 per month. If you compare that to the cost of an unlimited internet plan at $65 per month coupled with the cost of Netflix at $15 (currently), you are still saving money in the long run. In the long term, with the viewing options you have with Netflix, as well as other streaming platforms, the choice is clearly more economical and beneficial to the average person’s entertainment needs.

Netflix started as a rental service and has evolved in to an entertainment powerhouse for the modern world. Not only do they still offer the initial rental service that they established in 1997, they continue to provide a high quality entertainment experience that gives their viewer the sense of security and personal touch each one of us needs. They are ever evolving and the sky is the limit for their potential to take on even more entertainment ventures as they have expanded globally and through their own production company. I can foresee a change in the industry and a shift in culture as they offer their services for a reasonable price that is more economical than the big cable/satellite companies. It is this writer’s personal opinion that if Netflix continues on the path that they are on through their innovation, security consciousness and customer service based platform, they will be unstoppable and change the world of entertainment as we know it.


Alvarez, E. (2018, March 10). Netflix’s real advantage is that it’s a tech company first. Retrieved from

GOMEZ-URIBE, C., & Hunt, N. (n.d.). The Netflix Recommender System: Algorithms, Business Value, and Innovation. Retrieved from

Hosch, W. (2019, March 15). Netflix. Retrieved from

Kail, M. (2017, January 24). Netflix VP of It on the Future of Infrastructure. Retrieved from

King, R. (2015, June 1). How Netflix Manages Security in the Age of DevOps. Retrieved from

Netflix adds 7 million subscribers in global expansion. (2017, January 19). Retrieved from

Oser, J. (2011, April 28). What Is Adaptive Streaming? Retrieved from

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