What event convinced netflix to switch to a cloud-based

Reference no: EM133493962

Case Study: Netflix was founded in 1998 as a Web-based DVD mail service with a flat monthly fee andunlimited rentals without due dates or late fees. The company is credited with disrupting themovie rental marketplace and putting established competitors like Blockbuster Video out ofbusiness. Although Netflix lost money rapidly in their early years, the company continued torefine their business model and grow their subscriber base, focusing on site features like theirpersonalized recommendation system. Netflix became profitable in 2003, at which point ithad approximately 1 million subscribers.However, Netflix started to become the juggernaut it is today in 2007, when it launched itscontent streaming service. Netflix felt the coming shift away from DVDs and towards ondemand streaming video earlier than most, and they quickly refocused their business modelChapter 5, Case 3 Netflix: Building a Business in the Cloud 2continuedto capitalize. In a matter of months, Netflix went from the fastest-growing customer of theUnited States Postal Service to the biggest source of Internet traffic in the evening. Netflixstreams both TV and movies. In 2013, Netflix launched their first original show, House ofCards. The company now has approximately forty original shows and has renewed manyother shows that were canceled by their original networks. These offerings help Netflixdistinguish themselves from competing streaming services like Hulu and Amazon Prime andlure former cable subscribers who have "cut the cord" in favor of streaming services. Today,Netflix has 81 million subscribers and has revenue well upwards of $6 billion.However, the transition from DVD mailing service to content streaming giant wasn't withoutchallenges. Streaming video services accounted for approximately 78 percent of all Internettraffic in 2015, and Netflix towered over its competitors with a whopping 37 percent of allInternet traffic (YouTube was next at almost 18 percent, less than half of Netflix). One dayof Netflix traffic today is greater than the amount of daily traffic on the entire Internet in itsearly years.After years of struggling to keep pace with user demand, Netflix now relies on AmazonWeb Services (AWS) for its streaming capability. Known first and foremost as the giant ofonline retailing, Amazon launched its AWS service when it realized that the computinginfrastructure it had built to support its site could be useful to other companies as well.AWS is the leading cloud services provider, with hundreds of thousands of customers in 190countries across the world. AWS provides a full set of cloud computing and storage servicesfor companies of all sizes, from small businesses to the literal biggest streaming site on earthin Netflix. AWS allows clients to pay for only the computing power that they use, allowingthem to both save money and scale with demand.In 2009, Netflix began its transition to AWS to support its streaming business, and in 2010the company launched its iPhone app, its first service powered entirely by AWS. Netflixcontinues to grow rapidly today as they ramp up their expansion into other markets acrossthe globe, and Amazon is ready to grow along with it. Netflix can continue to focus oncontent, personalization, customer service, user interface, and offerings across multipledevices and platforms, and leave the worrying about data storage and streaming demandsto AWS.

Question 1. What event convinced Netflix to switch to a cloud-based service?

Question 2. What is Chaos Monkey and why is it importance for Netflix and its use of AWS?

Question 3. Why is it important for Netflix that AWS has multiple availability regions?

Question 4. Do you watch TV or movies on Netflix? Have you encountered varying quality of service at different times of day?

Reference no: EM133493962

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