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Netflix Streaming Video Service part 1

A wonderful new entertainment paradigm

Now you can get instant access to 20,000+ movies and tv shows on your television.

This follows on from our two part article, 'Warning - The End of the Internet as We Know It'.

Part 1 of a two part article about Netflix - see also part two 'Details of how to get Netflix working on your home system'.



Netflix made a name for themselves when they re-invented the traditional movie rental model, replacing the traditional video rental store with a postal delivery service, and innovatively costing it with no late fees or rental periods.

After almost a decade of growth through this model - a decade that saw them vanquish such seemingly invulnerable dominant retail outlets as Blockbuster - they have re-re-invented movie rentals with a new product for the internet age; instant internet streaming of movies.

Remarkably, not only does this product offer instant gratification, but it is also provided for much less cost each month, and allowing you unlimited viewing all month long.

What's the catch?  Well, yes, maybe there are a few minor issues, but in general, we consider this to be a triumphant success and a 'must have' feature for your own home.

A Quick History of Netflix

Netflix was established in 1997 and opened for business in April 1998.  It was the inspiration of one of the co-founders, Reed Hastings, who was annoyed at being charged a late fee when returning a regular rental DVD to the store.

Initially it was an online version of more or less the regular DVD rental store, charging $4 per movie rented plus $2 for postage.  As such, it struggled for much marketplace excitement or acceptance.

In September 1999 Netflix profoundly changed, when it introduced a totally new type of charging for movie rentals.  You now could pay a flat fee per month, allowing you to rent as many movies as you wished, with no extra cost per movie, and with postage costs included.

The only 'catch' to this model was the number of movies you could have out from them at a time.  The more movies you wanted to simultaneously have out, the greater the monthly fee.  And, of course, the lead times for movies to be mailed to you and then for you to mail the movies back to them provided limits on how many movies a month you could turnaround and view.

This was a paradigm shifting approach to video rental, but - initially - it was still lacking one essential ingredient of a traditional 'in store' renting experience - the ability to browse through movies and find movies you might like.  Netflix developed an extremely sophisticated video recommendation system based on each person's personal preferences and how they rate other movies they have seen, and then suggest movies to you, telling you how much they think you'll like each movie.  This recreated the 'random browsing' experience of being in a store, and actually enhanced it.

After some rocky times financially, Netflix grew to a more solid financial foundation, and steadily added more and more members.

In late 2008, Netflix released a new service that allowed its members the ability to stream some movies off the internet and direct to their television or computer.  It was not an unlimited service, and there were - to start - not a lot of titles available (Netflix has over 100,000 titles in its DVD by mail service).  Additionally, back then, fewer people had truly fast internet connections, which also limited the quality and convenience of the concept.

But internet speeds continued to increase, and Netflix signed up more and more studios to provide content, and their members showed positive interest in the new service.

In late September 2010 Netflix released a new 'streaming only' type of membership, in Canada, and then in late November, they added the service for their US customers too.

They would undoubtedly like to provide a similar service in other countries too, but doing so requires additional rights from the movie studios and Netflix is working slowly on securing these additional rights.

An indication of the popularity and success of the Netflix streaming is the incredible statistic that back in October 2010, Netflix was already accounting for more than 20% of all downstream internet traffic in North America in the peak evening hours between about 8pm and 10pm.

Updated :  New data for 'Spring 2010' shows that Netflix now takes 29.7% of peaktime internet traffic.  The growth of Netflix streaming service users seems to be continuing at a huge rate, and/or the amount of streaming 'value' enjoyed by current users is also increasing.

Further update Netflix's share of internet traffic has dropped back down to about 15% in 2019.  But that is not because it is streaming less - it is streaming more than ever.  Instead, there are so many additional streaming services now.

What the Netflix Streaming Service Is and Does

To start with, you will probably use your computer (or even your iPhone or iPad) to browse through the Netflix catalog and choose movies to add to your 'queue' of movies that you want to watch at some future time.

Next, from your television and whatever device you are using to connect it to the internet and the Netflix service, you will look through your pre-selected queue of movies and choose which one you want to watch.

After having selected your movie, you wait a short couple of seconds, and then - in less time than it takes a DVD to start playing - you're watching the movie.

If you want to pause it at any time, you can.  If you stop it, when you return, you can restart it from where you were before.  You can also fast forward or rewind through the movie.

After you've watched the movie, you can either remove it from your queue, or leave it there if you expect to watch it again in the near future.

It is as easy as that.  And - just as importantly - as quickly as that.  The Netflix streaming service is truly simple, and as close to instantaneous as you can ever hope for.

Variety of content available

There are currently (May 2011) over 20,000 titles to choose from with the instant streaming service - a mix of movies and television shows.  This is a huge number, but nowhere near as many as the 100,000+ different titles available for mail delivery.

Some of the television content is available as little as 15 days after first showing on tv.  Some of it is the previous season or earlier.

Not all studios have embraced the concept of digital streaming of their movies.  Like all other new methods of showing their products, the studios remain very resistant to change - remember that the movie studios tried to make VCRs illegal when they first came out, claiming that VCRs would destroy their business.

The reality has occurred, and these days most movies earn much more money for the studio from non-theatrical distribution than from selling seats in theaters.  But even so, most studios remain terrified of each new technology, seeing it as a threat, whereas it invariably ends up as an opportunity.

As evidence of that, in August 2010 Netflix signed a new agreement with one studio group comprising Paramount, MGM and Lions Gate Entertainment that committed it to pay $1 billion over five years to stream content from their libraries.  That's a huge additional source of revenue for the three studios.

In the case of these movies, Netflix can stream them 90 days after they appear on the premium Epix pay channel offered through Dish Network and Cox Communications.

Netflix has deals with other studio groups too, of course, including a new announcement in May 2011 with Miramax.  The range of movies available on Netflix seems to be steadily growing.

The net winners and losers from Netflix Streaming

Clearly, we are the net winners, getting the ability to watch a huge number of good quality movies every month for only $8.

Netflix obviously believes it can make a profit too, and the studios are clearly doing this in the hope of boosting their ongoing revenue from the movies they own.

So what is the catch?  There are two parts to the hidden catch.

The biggest loser at present is the United States Postal Service.  Netflix has been paying an annual postage bill of $600 million, and clearly when it offers internet streaming, it saves the postage cost.

The other part of the 'hidden catch' are the internet streaming costs.  As discussed in our two part article series Warning - The End of the Internet as We Know It at present the movies are streamed more or less 'for free'.

This is a dubious business model for the internet service providers, and the growth of services such as Netflix, services which consume huge amounts of internet bandwidth and resource, threaten to change the entire charging methodology of the internet.

The appeal of watching unlimited movies would reduce if we had to pay an extra couple of dollars to our ISP for data streaming costs, wouldn't it.

But until such time as that happens, there's no reason you shouldn't rush to join in this amazing new service.

Pluses and Minuses of Netflix Movie Streaming

Overall, the Netflix video streaming service is excellent, but it will not completely replace renting or buying your own DVDs and Blu-rays, and/or going to see the movies in the theatre too.

Here's an analysis of the experience offered by the streaming service so you can see what trade-offs will be required.


The biggest plus has to be that for only $8 a month you can watch all the movies you want, as many times as you want, on your own television at home.

This is remarkable value.  It is little more than half the price of a single movie ticket, half the price or less of a regular DVD mail delivery membership from Netflix, and about the same as you'd pay for three or four movie rentals from a local video store.

And unlike all these other ways of watching movies, you have the luxury of being able to choose instantly from about 20,000 different titles.  No need to get up from the couch, and no need to return DVDs.  No extra charge for watching more movies, and so on.  This is a brilliant value proposition.

Video Quality

The good news is that the video quality is almost always better than what is now almost forgotten - old fashioned standard definition analog television.

The quality will almost always be better that VHS tapes.  Some of the time it may not be quite as good as DVDs.  Some of the time you'll be getting quality comparable/indistinguishable to DVDs, and occasionally you might get lucky and have some 720 line video (better than DVD's 480 line video) streamed to you.

It will never get close to the sharp vivid quality of a Blu-ray disc however.

Update :  What a difference a few years makes!  Now (2019) most Netflix content is streamed in HD 1080P resolution, and optionally some content is available in 4K.

Audio Quality

This is probably the Achilles' Heel of the service at present.  It is generally held that the overall quality/experience you get from a movie is influenced equally by the quality of the sound and the quality of the picture.

Whereas Netflix scores satisfactorily in video quality, it earns a big fat fail for those of us with surround sound systems.  For most of us, all we'll be able to get out of our Netflix movies is flat stereo sound, which sounds massively less engaging that good surround sound these days.

The only exceptions are if you are using a Play Station 3, and possibly a Google TV box which can decode the Dolby Digital Plus surround sound stream that Netflix is introducing to some of its streams.

We have also been advised by Roku that very few of the movies Netflix serves have any surround sound encoding on them at present, so maybe you don't yet need to rush out and buy a PS3 or GTV.

This is a strange and disappointing decision on Netflix' part.  Noticeably enhancing the audio quality would require very little bandwidth, whereas each noticeable enhancement of the video quality requires massive bandwidth.

I'll guess that perhaps 160kb of their maximum 4800 kb bandwidth is given over to audio.  If Netflix were to simply double that audio bandwidth, taking a thin sliver out of the video bandwidth, the improvement in sound quality would be massive while the offsetting loss of video quality would be almost invisible.

Update :  This too has improved and much Netflix content is now (2019) in surround sound.

3-D Pictures

We are unaware of any plans for Netflix to add 3-D video streams.  And thank goodness for that - once the novelty wears off, most people realize 3D movies to be nonsensical gimmickry that detracts from rather than adds to their viewing experience.


There are no advertisements on a Netflix movie.  And you don't have to struggle to get past all manner of ridiculous nonsense and copyright/do not copy notices at the start of the movie either.

Generally you push play and within a few seconds, the movie starts.

Slow and Fast Motion

You can speed through the movie forwards or backwards at a very fast rate, but this is a bit imprecise, meaning you might overshoot or undershoot the part you're trying to reach, and you have to wait a few seconds for the stream to re-align to the new point in the movie you have skipped ahead (or jumped back) to.

There are no facilities for slow motion.

Chapter Stops

There are on chapter stops on the presentations.

Extra Features and Commentaries

There are no extra features, no deleted scenes, no 'The Making of ....' type featurettes, and no extra channels of audio commentary.  You get the bare bones movie, and nothing else.

So - Should You Get Netflix

There's not a lot of downside and an incredibly amount of upside waiting for you to enjoy with the $8/month Netflix video streaming service.

Update :  Alas, the good old days of $8/month service are now (2019) definitely a thing of the past.  While the cheapest plan is now only $1 more ($9/month), it is limited to use on one device only and is lower quality streaming.  Their "standard plan" is now $13/month, and if you want 4K, then you pay $16/month.  Details here.

Because you're not locking yourself into any length of contract - and doubly because they are offering a free one month trial to new users - you're not risking anything at all to try out Netflix.

If you don't already have a Netflix capable entertainment system, you can try it out on an iPad or a computer.  This won't give you the full 'home theater' experience of course, but it will give you a taste, and if you like the taste, you can then upgrade your home theater system for less than $100 to make it Netflix capable.

How to do all this is explained in the next part of our two part series.

This follows on from our two part article, 'Warning - The End of the Internet as We Know It'.

Part 1 of a two part article about Netflix - see also part two 'Details of how to get Netflix working on your home system'.

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Originally published 18 Feb 2011, last update 21 Jul 2020

You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.



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