Netflix’s Global Expansion is Met With Growing Pains

By Tamanna Desai
Tech & Innovation Assistant Editor

If you are a Netflix user then you might have heard or first-hand experienced how rough life is when you get the statement, “Netflix is not available in your country as of now.”  However, we may never see that statement ever again. According Wired.com, the multi billion company has now serviced every country in the world except Crimea, Syria and not surprisingly, China. Netflix has outdone its competition with not only streaming shows from other service providers such as Fox and ABC, but also creating a few spectacular shows of its own.

Netflix started out in 1997 as DVD rental company, and then expanded into digital streaming of select movies and TV shows. More people started to stream its services thus helping Netflix to expand exponential in the first 10 years of its life. Some analysts say that Netflix is not bringing in big profits because of its goal to expand according to the New York Times article, however in future years the company will definitely see a return on its investment.

Despite the breakneck expansion, Netflix is experiencing a very hard time entering the Chinese market. The Chinese government has censored all of the media seen by its citizens. Chinese regulators look at content from media providers and screen it to make sure there is no nudity, violence, anti-government content and much more. As of now, the people in China who watch the Netflix shows such as House of Cards streams it illegally using a masked IP address and other use of proxies. The company is cracking down on those kind of users but the amount of people who do that is decreasing due to Netflix’s increasing contracts with countries such as Australia. China is the hardest obstacle for Netflix because the content that Netflix has is very broad and many of the shows on there, do not comply with the country’s regulations. In order for the big media provider to launch in China, it needs to collaborate with a Chinese provider that is established in the country. Although launching its services in China seems close to impossible, Netflix CEO Reed Hastings seems confident that it will overcome the hurdle and thus expand its user population to that side of the world.

Another vexing problem that Netflix will have to face has to do with the architecture of the global internet. According to Wired, Netflix in North America averages at around 35 percent of all of the internet traffic, and this number can be expected to rise during peak hours. Netflix’s global expansion can easily account for 20% of global internet traffic.

This is a problem because they rely on fast internet connections to ensure that streaming quality can be maintained as the content is delivered to the customers’ computers/TV’s. One solution that Netflix has employed would be the usage of Content Delivery Network’s (CDN) inside the Internet Service Providers’ network. The job of the CDNs would be to stream content to customers directly from the communication hubs that are owned by the companies who manage the internet infrastructure of an area. This eliminates the distance that data needs to travel in the internet. For example, it is a lot easier to stream content to South Korea from a hub inside their digital communication infrastructure than it is from across the ocean in the United States.

The competition to Netflix is also growing in that here are lots of companies such as Amazon’s Instant Video Service, Hulu Plus, and HBO Go to name a few that are after the same market. Netflix certainly has global reach, but market power is a different story in the United States for the time being.

A version of this article appeared in the Tuesday, January 26th print edition.

Contact Tamanna at
tamanna.desai@student.shu.edu

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