Netflix setting its sights on emerging markets
‘Every bit counts’ as digital content giant targets consumers on mobile devices
As Netflix continues to produce billions of dollars’ worth of original content, it’s easy to forget that the company’s business model is firmly rooted in the delivery of digital content, served with as little friction as possible.
For California-based Netflix Inc., frequent improvements to how all of its content is delivered isn’t just for subscriber convenience or benefit.
Retaining the company’s 94 million paid subscribers is crucial, but growth is the name of the game and — when reading between the lines of its latest technology improvements — the company has its sights set on emerging markets.
Netflix uploads multiple versions of shows or movies to its cloud servers, encoded in different file sizes. When a subscriber starts watching content, Netflix will know which file to serve, based on the device being used.
A big screen TV on fast home Internet service will be served a higher bitrate — the number of bits transmitted per second. More information makes the picture quality better, while someone watching on a cellphone will get a lower bitrate to reduce the amount of bandwidth being used.
Netflix has been trying to refine the way they encode their videos to push significantly better quality video at a lower bitrate, so as more people move to mobile devices, the video they consume won’t take up as much of their bandwidth limits.
But, more important, it also means the company can grow its subscriber base in emerging markets where smartphones and data plans are more common than home Internet service.
“I’m originally from the Philippines, where the main access to the Internet is actually people’s cellphones,” Anne Aaron, Netflix’s director of video algorithms, told a small group of journalists at the company’s headquarters.
“Every bit counts. So the role of my team is to make sure every bit actually adds to the video quality of what people watch, and our main goal is to have a great viewing experience where you enjoy the TV show or movie at any bit rate.”
Part of the way this is achieved is through efficiency. Netflix’s encoding process was once done on a per-title basis, meaning its algorithms would look at scenes with the most action and use that as a basis for how much to compress the quality of the video.
But Aaron’s team has moved the encoder algorithms to a “per chunk” basis, which would look at one-to-three minute segments at a time, meaning they can compress higher quality into smaller bitrate because action moments often aren’t as frequent and the threshold is lower.
Netflix has brought in experts from around the world, including two professors that specialize in encoding, to help make their algorithms even more efficient.
So now video looks equally as good at half the bitrate — and in some cases, it’s even lower. That drives down the bandwidth costs for subscribers, and potential new users in emerging markets are more likely to be attracted to video that looks good on any device.
LANGUAGE ACCURACY
Quality video that doesn’t take up a lot of bandwidth is half the battle. Netflix is also innovating when it comes to localization — the subtitles and dubbing done in other languages.
“In 2012, we launched Lilyhammer … in seven languages and 96 language assets,” said Denny Sheehan, Netflix’s director of content localization and quality control. “Cut to (this year) where we’ve launched Iron Fist in 20 languages and we have 572 language assets. And by language assets, I mean subtitles, audio dubs and audio description.”
For Netflix and Sheehan’s team, the way to nail localization is by focusing on context. In some cases, the company bypasses local companies that offer people for hire and hires translators directly, in case there are questions on things like cultural jokes, voice inflection and other contextual elements that might be missed in a straight translation.
Netflix also uses style guides and glossaries of terminologies or key phrases to make sure there is consistency across shows or movies as well as in the marketing materials and elsewhere in the company.
To expand into more languages and markets with a high level of accuracy, Netflix launched its own translator program in March called Hermes. Anyone can register and choose a language they speak, then take a quick test.
Those who score in the highest percentiles will be contacted by Netflix and interviewed to become a paid translator.
With Netflix’s eyes on new markets to keep its subscriber base growing, these kinds of technological innovations and focus on localization will already be in place during expansion to help bring new countries on board.
“In Africa, India, parts of Asia, parts of Latin America where there wasn’t this huge build-out of fixed lines to people’s homes, in a lot of cases some cellular networks are substituting for the last mile,” said Ken Florance, Netflix’s vice-president of content delivery.
“So any of the benefits from a 200 kilobits stream looking great on a cell network in New York City will also be seen and look fantastic on an old copper DSL in Bogota (Colombia).”