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Netflix Now Has Another Way to Keep Theatergoers at Home

By Daniel Vena - Jul 18, 2017 at 10:04AM

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Netflix isn't relying solely on its library of self-produced content in the ongoing streaming wars. It also develops and embraces the best technology around.

Since it rolled out its streaming service a decade ago, Netflix, Inc. (NFLX 2.72%) has become the global leader in that area, with more than 100 million subscribers worldwide. The company continues to add to its self-produced, award-winning content and is expected to spend $6 billion on shows this year.

Not content to sit on its laurels, Netflix isn't relying solely on the depth and breadth of its library of movies and TV shows to maintain its leadership in the space.

The company has continued to evolve, developing or adopting new technology to improve the quality of the experience for its customers. For example, Netflix was among the first to embrace 4K streaming and HDR for subscribers and recently announced that it will add Dolby Laboratories, Inc.'s (DLB 1.76%) Atmos to its resume.

Red and black home theater setup

Dolby Atmos and Netflix provide theater-quality sound in your home. Image source: Getty Images.

Sound comes alive

Dolby Atmos is a surround-sound technology developed for movie theaters to provide a richer, more realistic audio experience that viewers can now enjoy at home. In most cases, speakers are pointed at the audience, and the sound comes from the fixed location of the speakers. Dolby Atmos treats sound elements as flexible and moving virtual objects that can be strategically placed. Speakers are placed overhead, or sound is projected at the ceiling so that sound approaches the listener from all around, and specific sounds can be directed to specific speakers to mimic the real world.

Dolby describes it this way: "Dolby Atmos delivers moving audio -- sound that can be precisely placed and moved anywhere in three-dimensional space, including overhead. It brings entertainment alive all around the audience in a powerfully immersive and emotive experience." 

The technology is currently available on Netflix Original Okja, by internationally acclaimed director Bong Joon Ho, and will show up in other Netflix Original titles making their debut later this year, including futuristic anime BLAME!, supernatural thriller Death Note, Will Smith-led fantasy epic Bright, and action thriller Wheelman. The technology will be supported on the Xbox One and Xbox One S, and on 2017 LG OLED TVs. Netflix plans to add support for additional devices over time.  The technology will also work on TVs equipped with Dolby Vision, the company's premium high-dynamic-range format. 

Blue swirly ball with Dolby Atmos logo.

Image source: Dolby.

A culture of innovation

In 2016, Netflix introduced cellular data controls to help subscribers manage data caps and overage fees. With a very minimal change to the streaming bandwidth, it was able to set a balance by providing "good video quality with lower data usage." 

Netflix has also been using artificial intelligence to contend with worldwide variations in bandwidth. The company developed a method known as the Dynamic Optimizer that used algorithms to review each individual frame of a video and compress only when it was necessary, allowing it to reduce the bandwidth requirements while improving streaming quality at lower speeds. 

Most recently, Netflix has unveiled groundbreaking branching technology that makes programs interactive. Viewers are given the option to determine a character's next move, which leads to additional decisions further down the line, producing a variety of potential evolutions of the story.

Final thoughts

As streaming competitors such as Hulu and Amazon.com, Inc. ramp up their game, Netflix continues to innovate and build its library of quality original content. Its strategy is paying off, as subscriber numbers passed 100 million, the company surpassed $2.5 billion in quarterly revenue for the first time, and Netflix Originals were nominated for 92 Emmys, far exceeding the 18 for Hulu and 16 for Amazon. This news all bodes well for Netflix investors.

Danny Vena owns shares of Amazon and Netflix. The Motley Fool owns shares of and recommends Amazon and Netflix. The Motley Fool has a disclosure policy.

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