NETFLIX pays over $1 Billion/year to Amazon.😨😨
As most of the people around us are aware of these two big business giants: NETFLIX and AMAZON, as two different companies who are dealing in a totally different niche. Amazon is an online shopping stop, where we can find almost everything we want, no matter where we are around the globe. While Netflix is an entertainment platform that allows its members to watch TV shows and movies without commercials. And if you think the same then you are completely right! But what if I tell you that what you think of Amazon and Netflix as independent companies and no link in between is wrong? And Amazon has played a major role in growing Netflix? But how, right?
ABOUT AMAZON
So firstly, I would like to clarify your idea about Amazon. Amazon AWS provides instances, servers, and lots of other resources on the cloud for many companies as AWS is one of the biggest cloud providers in the commercial domain in the industry. And among the rest of the other clients, Netflix is one of the biggest users of AWS.
Netflix uses AWS for nearly all its computing and storage needs, including databases, analytics, recommendation engines, video transcoding, and over a hundred other functions that in total it uses more than 100,000 server instances on AWS.
The Calculation behind 1 Billion Dollars:
Let’s start by looking at how many users Netflix has: 208 million. Let’s assume that every customer, paying a monthly fee, is watching on average at least 1, maybe 1.5 hours a day (can include passive watching on the couch in the evening and while Netflix and chill trend).
Let’s take 1.5 hours as a measure, which is proved by some statistics on Google. That means, that Netflix content is streamed 1.5*208,000,000 hours per day, which comes to 312,000,000 hours per day or 2,184,000,000hours per week.
Let’s look at the streaming size per minute. When watching in standard 360p, the computer streams about 250MB per hour or 4.2MB per minute. Compared to watching the stream in Full HD, the download rate is approximately 20MB per minute.
Let’s assume that between mobile, computer, and TV streaming customers, the average definition is at 720p. Thus we have a download size of about 850MB / 0.85 GB per hour of streamed content. That means, Netflix has an AWS data traffic, only for streaming, of 1 billion GB per week. That’s 1,000 Petabytes, to make the number more readable. We will leave data streaming used for their website and trailers and video previews out of the picture, as this would be minor compared to the actual streaming volume.
Let’s look at what AWS charges for their services, assuming that Netflix is charged as a normal customer. I’ll leave out the cost approximation for the storage volume, as I find it nearly impossible to properly guess the amount of content Netflix offers.
For large companies, AWS charges $0.021 per transferred GB per month. As we calculated above, Netflix transfers about 1 billion GB of data to their customers per week, thus 4 billion GB of data per month. That makes a beautiful bill of $84 million per month or $1 billion per year. With a yearly revenue of about $25 billion, the servers cost Netflix about 4% of their total volume, which can be considered very cheap, as Netflix’s largest cost factor, besides their Original series, are their server and streaming costs.
WRAP UP
I hope now you understand the story behind NETFLIX and Amazon that I was talking about. The calculation might not be perfect, but now we know there is a huge pay from Netflix to AWS as a user. In different articles and as per different surveys, we might come up with some random calculations and they are definitely not the exact amount involved. The calculation above is an approx value as per the calculation.
Well, as per the surveys and research these industries are expanding at an enormous rate and will multiply themselves into a huge number by the end of 2025.
Thanks for reading. Hope you guys enjoyed it!
