updated 11:00 pm EDT, Mon June 4, 2012
Open Connect will save Netflix money on streaming
Netflix announced today that the company will be delivering its Instant Streaming content through its own content delivery network. In a blog post on the Netflix Blog, the company detailed the new service and the reasons behind the decision to move away from commercial providers. Dubbed "Open Connect," the new single-purpose content delivery network is expected to save the streaming company a great deal of money over its current delivery options.
Netflix revealed that its users stream about a billion hours of movies and television per month using the service. Until recently, the company has been relying on commercial content delivery networks for its streaming needs. As Netflix transitions to Open Connect, the company will continue to rely on commercial CDNs for a few years, but eventually most network data will be served by the in-house solution.
Open Connect will operate at no additional cost for ISPs, and about five percent of Netflix's data is already being served through the in-house network. Netflix also says that it will share its hardware design and the open-source software components of the server. ISPs will be able to either install Open Connect appliances within their networks, or peer with Netflix directly.
The move toward its own CDN is a testament to the successes Netflix has enjoyed with its streaming service. Last year, the company surpassed Apple in terms of US online movie revenue, according to outside observers. This success has not come without cost, though, as the streaming service has come into conflict with a number of content providers, who allege that Netflix cannibalizes ratings and sales from content providers.