Netflix commits to cloud

Recently Netflix announced that it will close its last data centre, becoming fully reliant on the public cloud (specifically Amazon Web Services) for all its digital services as well as IT infrastructure.

The move makes clear business sense for Netflix, and it is the first of many companies likely to make a similar shift.

Netflix has had most of its architecture in AWS for some time, with the company stating back in 2010 that the reason behind such a cloud investment was that it did “not have to guess months ahead what our hardware, storage, and networking needs are going to be. We can programmatically access more of these resources from shared pools within AWS almost instantly."

Such flexibility has helped the business grow exponentially, with 4.9 million new subscribers in the first quarter of this year alone. With consumers wanting an on-demand video experience at a peak time of around 6 – 11pm, Netflix has to utilise its AWS investment to cope with these requirements. When you think about the differing time zones it also has to contend with, and the shift of viewers from the East Coast to the West Coast of the USA for example, you begin to see why it has opted for such a flexible infrastructure.

Handling the highs and lows

While Netflix is ultimately in the business of content delivery, there are other areas of the business that require infrastructure to grow the company. Specifically, Netflix has a large analytics platform that helps inform the company’s strategy by providing insights into customer preferences and behaviours. This allows the company to make informed decisions on what content to invest in for future growth. By running this analytics platform using software in a cloud environment, Netflix can quickly and easily leverage this data to drive their business forward.

While public cloud is at the heart of the Netflix operation, it should also be remembered that the company has invested huge resources in its content delivery network in terms of technology and expertise to ensure that it is in close enough proximity to the consumer to ensure a good experience. Content delivery, for example, has to exist as close as possible to the key traffic exchanges and ISPs in carrier neutral data centres to provide an on-demand service, while continuing to update the content through the cloud. Without appropriate infrastructure at this stage of content delivery, the investment in AWS would be largely redundant.

Infrastructure in the future

The Netflix cloud strategy makes complete sense for Netflix at the moment. It’s simple – a cloud infrastructure allows the company to support both content distribution as well as analytics, both of which are key in making Netflix so successful.

However, whilst we could expect to see the likes of HBO follow this ‘all-in’ approach by Netflix for its streaming services, other companies may be more reluctant to adopt a complete cloud adoption approach just yet.

Instead, it looks as though most content delivery companies will take a hybrid approach aiming to reap the ‘best of both worlds’. With Gartner recently predicting that in the next two to five years hybrid IT will achieve mainstream adoption, it will be interesting to see if full-scale moves such as this one by Netflix will speed up the overall industry transition to hybrid cloud.

Regardless of the format of cloud that will be adopted, they all depend on the data centre in one form or another to deliver customer services. As a result, the often overlooked data centre has become the core of the online world. While the modern consumer doesn’t currently recognise the value of such infrastructure, over time they will become more savvy about the quality of service they should be receiving and infrastructure will indirectly become a point of differentiation for entertainment companies. In such an environment, the data centre will take centre stage for many years to come.