Video streaming services are just a few clicks away. With video streaming services like Netflix, Hulu, and Amazon Prime revolutionizing the way people access video content, queries like how to start a streaming service like Netflix have increased.
The global video streaming market is projected to reach $787 billion by 2035 at a strong CAGR of 12.3%. Starting your streaming service amid such a potential market might seem exciting, but it requires careful planning, strategic investment, and a clear understanding of the streaming landscape.
If you are motivated by Netflix’s success and want to create your version of a Netflix-like service, we’ll show you how it’s done.
This guide will get down to the nitty-gritty of launching a streaming service like Netflix, video monetization models, necessary tools, essential features, important considerations, and the overall cost involved.
Table of Contents
Understanding the Netflix Business Model
‘Entertain the world’ — that is Netflix’s mission statement and something that they’ve built their business model on. Netflix’s ability to adapt, curate, and distribute video content has been the hallmark of its success in the video streaming industry.
While Netflix’s primary business model is based on subscriptions, it also earns from its content acquisition and producing originals. Let’s explore more on that in the following sections:
1. Subscription-based Model (SVOD)
Netflix’s subscription concept is quite simple: users pay a monthly subscription fee in exchange for unlimited access to an extensive content library.
Netflix could manage to persuade people who buy DVDs to pay for a monthly subscription to an on-demand video streaming service. People didn’t have to pay for a single standalone DVD; instead, they got access to thousands of video titles for a subscription.
Most importantly, Netflix has no pay-per-view charges, no rental charges, and no advertisements disrupting the streaming experience. Viewers know what they’re paying for, and what they get out of it; this kind of predictability harnessed millions of subscribers towards Netflix.
2. Tiered Plans
Unlike a one-size-fits-all subscription structure, Netflix implemented a tiered subscription structure based on viewing needs and audience’s willingness to pay. While Netflix’s plans have evolved over the years, the core concept remained the same: offering multiple options according to audience’s preferences and budgets.
Netflix’s tiered pricing strategy perfectly illustrates the ‘Goldilocks Effect’: the idea that people prefer options that feel “just right.”
With three plans on offer, viewers could choose between the basic, standard, and premium tiers. The basic plan offered affordability but limited access, while the standard plan struck the right balance between value and features. This made it the most popular choice, and eventually, many subscribers moved up to the premium plan for the added benefits.
3.Original Content Production
Netflix’s bid to produce original content began in the early 2010s as part of its effort to remain competitive in the industry. As license fees to acquire content rose alarmingly, Netflix had to invest in producing original content to meet the demand for content.
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Even though Netflix spends a massive amount on producing original content, the streaming giant has proved that it can monetize the content worldwide in over 190+ languages simultaneously.
So this one goes straight into the ‘to-do’ list if you have been exploring how to create a streaming service like Netflix: launch a platform with multi-language subtitles and support for dubbed audio tracks.
4. Multi-device Delivery
Netflix understood the importance of delivering content to the ‘on-the-go’ viewers, who love to consume content during their travel, workouts, and so on. When Netflix turned its game to connected-TV devices, it started rivaling cable TV and broadcast TV giants. Netflix became multifold profitable when it started exploring mobile, tablet, and smart TV versions.
For content owners trying to build their Netflix-like streaming service, multi-device delivery (web, mobile, and smart TV) is a must-have feature. Implementing this feature strategically without going overboard on your budget forms one of the core challenges of launching a streaming service.
5. Content Acquisition
While Netflix’s original production has a profound fanbase, the acquisition of third-party movies and shows remain an integral part of their content strategy. Netflix acquires content from extensive content owners over an agreement for a specific period. Such licensed content often fills the gaps in content libraries, and sometimes may offer the variety that viewers expect.
How to Start a Streaming Service: A 7-Step Guide
Building a streaming service like Netflix is all about making it simple for viewers to stream content. A successful streaming service connects potential content owners with intended audiences for meaningful connections. Whether you’ve been exploring how to start a streaming service like Netflix from scratch or upgrade an existing one, we have you covered in this section.
To create your Netflix-like streaming service, you need to follow the below steps:
Step 1: Conduct Market Research and Identify Your Niche
Would you recommend a horror movie to someone who just finished watching a kid’s animation movie? Or suggest a slow-paced documentary right after a high-octane action movie? Probably not, because viewers would not prefer such content at that moment.
Market research helps you understand the content preferences of your target audience, and curate the content libraries that appeal to them.
Market research also helps you identify your ‘viable’ niche, and exhibits how better you can serve the specific niche. This step is non-negotiable in your quest to build a Netflix-like app as it will guide you throughout the process.
Step 2: Create a Scalable Business Plan
You should be aware that when you build a streaming service like Netflix, you’ll need a proper business plan to meet the needs.
The primary importance of a business plan is that it’ll help you make informed decisions. You have to sit down and decide on the major components of your streaming service: budget, revenue projections, video monetization models, content strategy, and marketing strategies.
Step 3: Secure Content Rights and Licensing
Acquiring content rights may seem straightforward if you have ample budget on your side, but it requires much more strategic planning. You need to factor in certain aspects like contract terms, legal compliances, and costs.
You need to consider whether the contract covers the countries and devices where you plan to stream. When not done right, you may end up in copyright infringement claims and never-ending lawsuits.
You can deploy the geo-restriction feature to limit content access based on the user’s geographic location. Employ an ideal platform that comes equipped with such essential features to save you from copyright claims. We’ll explore more on building the right platform for your streaming business in the next section.
Step 4: Build Your Platform with the Right Technology Partner
This is where your efforts materialize; yes, with the help of the right online video platform, you can lead your streaming business in the right direction.
If you have little idea, you can explore the top video streaming platforms that can work out for you. Choose a platform that knows the nitty-gritty of the video streaming industry, video monetization frameworks, and development frameworks that don’t exceed your budget.
While planning on how to make a streaming service, you need to consider a platform that offers hosting freedom. For example, VPlayed offers both cloud hosting and on-premise hosting along with scalable infrastructure for streaming.
Step 5: Choose a Monetization Model (SVOD, AVOD, TVOD)
You can have excellent content on your streaming service, but if the monetization model isn’t right, you won’t be unlocking its full revenue potential. Choosing the right model is key to turning viewers into paying subscribers, maximizing profits, and ensuring your platform can grow sustainably.
When it comes to making money off your streaming service, you should carefully consider your options. Here are the three major monetization options:
1) SVOD (Subscription Video on Demand)
* How it works: Viewers pay a monthly subscription fee
* Best For: Those who own extensive content libraries or who produce original content.
* Example: Netflix, charges monthly subscription.
* Why it Works: Consistent income and Loyal subscribers.
2) TVOD (Transactional Video on Demand)
* How it works: Viewers only pay for what they want to watch
* Best For: Those who produce exclusive content or host live events
* Example: iTunes Movies, rent or buy a movie when you want.
* Why it Works: Assured revenue per transaction, suitable for occasional viewers.
3) AVOD (Advertising Video on Demand)
* How it works: Viewers watch content for free, but with ads in between
* Best For: Those who just starting their streaming business
* Example: YouTube, watch videos with ads in between.
* Why it Works: Potential pathway to convert casual viewers into subscribers.
Step 6: Launch and Market Your Platform
Launch your basic version of the streaming service, and then scale up as the demand grows. You don’t need advanced features from day one. Focus on the core loop: user registration, authentication & profile management, search functionality, etc.
Promote your streaming service on various channels (including web, social media, and traditional channels). A strong marketing campaign generates buzz around your streaming service, which invariably brings viewers to your content.
Step 7: Analyze, Optimize, and Grow
Monitoring analytics dashboard for understanding user behavior is crucial in this stage. Continuous analysis and optimization help you make data-driven decisions that increase engagement and revenue.
Leverage the granular insights to improve your content strategy, enhance search and recommendation engines, and fix performance issues. Monitoring analytics help you address user pain points, keep abreast of the streaming trends, and keep your streaming service thriving amidst cutthroat competition.
Key Features Your Netflix-like Platform Must Have
Now that you know how to start a streaming service, you may be wondering what features your streaming platform should have. Here are the essential capabilities your platform must have to compete in today’s market:
1. Multi-device Compatibility
We explored Netflix’s multi-device strategy earlier, but this feature deserves renewed emphasis here because it’s not just important; it’s absolutely critical to your platform’s success. As a professional streaming service, you have to include this feature that offers the utmost convenience of streaming to the viewers.
2. DRM & Secure Content Delivery
DRM (Digital Rights Management) is a technical system that handles the authorization and use of copyrighted material. This feature becomes important if you want to monetize your video content, as it makes content accessible only to subscribers or paid users.
Unlike standard video encryption technologies, DRM tools do dual jobs: both encrypting the video and protecting the encryption key. In some instances, DRM protection is coded into a video file. For content creators, they can tweak the number of times a viewer accesses the video. For example, it can be an unlimited number of times (for paid subscribers) and only one or two times (for pay-per-view users).
3. Adaptive Bitrate Streaming (ABR)
Adaptive Bitrate technology works in conjunction with the Video player to monitor network throughput and dynamically adjust the video resolution based on the receiving device’s internet speed.
While ABR optimizes video playback quality by adjusting its rendition in real time, it also reduces buffering and supports uninterrupted video streaming. Viewers no longer need to manually adjust video quality, because ABR constantly alters the video quality based on fluctuating network conditions.
4. Custom Branding (White-label)
When you know how to start a streaming service like Netflix, you face a dilemma: whether to build everything from scratch or leverage existing white-label solutions.
Choose white-label if you want to test the market viability, have limited technical resources, or want to focus on content/audience rather than technology.
With white-labeling, you get complete branding freedom, from customizing overlays, video player, logos, and everything to resonate with your brand. The challenge?
Choosing the right platform from available options. We have compiled the best white-label video platforms to help simplify your search.
5. Video Content Management System
Video CMS (content management system) empowers your video streaming service with video upload, categorization, metadata tagging, distribution, content scheduling, and more capabilities. But here’s the catch: when you overload your CMS with too many features, even simple tasks like uploading a video can turn into a hassle.
Load the enterprise video content management system with basic features that make the uploading process as simple as possible. Assign role-based user access to streamline access to the video CMS, i.e., only assigned users get to access content scheduling, categorization, and sensitive features.
How Much Does it Cost to Launch a Streaming Service?
The cost of launching a streaming service like Netflix lies between $30,000 on basic to $1 million for a large type of platforms, however it is nearly impossible to determine the exact cost of starting a streaming service as it depends on numerous factors, such as the characteristics, complexities involved, and functionalities desired.
Important note! You need to jot down the exact features and functionalities that you plan to have in the initial launch. You can scale up the streaming service once there is consistent traction and demand for the video content.
Conclusion
You needn’t be a serial investor or a venture capitalist with massive budgets to start a streaming service like Netflix. Anyone who understands how to start a streaming service like Netflix knows how the video streaming industry works. Streaming platforms have democratized and reduced the entry barriers into the industry.
We hope that this blog steers you along the streaming service journey, from conducting purpose-driven market research to launching and promoting your streaming service. Along the way, we have also touched base on Netflix’s successful business model.
Remember that succeeding with your streaming service is as important as launching it. Continuously optimize your content strategy, seek consistent feedback from your audience, and fine-tune technology to keep your streaming service thriving.
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Frequently Asked Questions (FAQ):
Streaming services are an additional way to make money, to create brand identity and to launch their own streaming services. If you are a business owner trying to invest in a billion dollar economy industry then streaming services should be the go-to choice and as a content creator you can market your video globally and own your video content with your own streaming services.
To ensure the Security of your Streaming Service online protect it with security features like water-marking, multi-DRM, geo-fencing, IP restrictions etc. Platforms like VPlayed, Brightcove support these features.
Based on the live streaming platform provider the price for starting a streaming platform differs, on an average the cost to build a streaming service is around $50,000 to a million dollars. The costs may also differ with the requirements from the business owner.
To start a Netflix-like app, create a USP for your business, decide the essential technical features with the platform provider, fix monetization methods based on the viewers and market your platform with a strategic approach targeting your audience base.
Yes absolutely, streaming services are the best way to make money for video contents online, multiple monetization plans like SVOD,TVOD,AVOD and Pay-per-view .
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Senior Analyst specializing in Online video platforms, OTT, VOD, and white label video streaming solutions. Expert in analyzing industry trends, technologies, and monetization strategies to help businesses optimize their streaming services. Passionate about innovation and the evolving digital video landscape.
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