For those of us living in a country that provides internet speeds among the top 10 in the world, it can be easy to take that for granted. Not so for Netflix (NFLX +2.60%), which deals with a number of challenges around the world every day in its quest to deliver a world-class video streaming experience. Successfully dealing with slow or spotty internet service and the problem of data caps can mean the difference between gaining or losing customers (or potential subscribers) in much of the world.
The company has developed a number of tools in an effort to improve the experience for more than 139 million subscribers around the globe. Even more importantly, the ability to serve a consistent experience in underdeveloped parts of the world may help convince people who are not yet customers to join.
Netflix has developed additional technology that will improve the experience -- for both current and future subscribers.
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Automating the process
Netflix has introduced Smart Downloads, a feature customers can choose that will automatically delete a previously downloaded episode after you've finished watching it and upload the next episode -- but only if the device is connected to Wi-Fi. Automating the process eliminates the need for customers to do these cumbersome steps themselves.
This tool will be particularly valuable to customers who experience intermittent connectivity, bad reception, and dead spots -- which includes much of the developing world. It will also help commuters who travel by train, subway, or planes, which have limited (and/or costly) internet service. It will also serve those who live with inherently slow internet, allowing them to download programs when service is better so they can be watched at a later time.
This feature has been available to Android users since mid-2018, and it has been rolled out on a variety of platforms including Windows 10 and, most recently, on iOS.
Longtime Netflix followers will recall that in late 2016, the company began allowing customers to download content for offline viewing, a feature that had long been desired by customers. This allowed viewers to continue watching movies or television shows where internet access was either limited or cost-prohibitive.
Different ways to gain the edge
This isn't the first time Netflix has looked to cutting-edge technology to improve the customer experience. The company developed an artificial intelligence (AI) tool, which the company dubbed the Dynamic Optimizer, which is capable of reviewing each frame of a video and compressing frames or scenes individually, and only as much as is necessary while maintaining the quality of the image.
Previous systems relied on compressing the entire stream, which would sometimes result in images that were unclear, pixelated, or fuzzy. This helps lower the threshold of the bandwidth required for streaming -- without the buffering that previously plagued streaming technology.
The algorithms also improve the experience for viewers using tablets and smartphones by reducing the amount of bandwidth used, helping keep subscribers under the data caps set by many cell phone providers.
Check out the latest Netflix earnings call transcript.
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The company is also experimenting with lower-cost subscriptions in parts of the developing world. The first such confirmed location is Malaysia, where the company introduced a mobile-only plan for 17 ringgit (the country's unit of currency), which translates to just over $4 -- about half the price of the next tier. Netflix confirmed that it's testing similar plans in a "few" countries.
The future is international
Subscriber growth is slowing in the U.S. for Netflix as its most established market becomes increasingly saturated. Going forward, the company will have to rely on its international markets to take up the slack.
Netflix has been increasing the content it develops for its growing global fan base, but having the best content will only take the company so far. By addressing the technological limitations that exist in other parts of the world, Netflix is increasing the likelihood that its worldwide subscriber gains will continue.
