With such an incredibly large database, and a correspondingly large number of visitors, it Is perfectly reasonable to assume Netflix spends a huge chunk of money on monthly server costs.
Now these kinds of figures are obviously kept a secret by the company. Thankfully, though, there are numerous discussions and insights on the subject that make it possible to come up with a close estimate of just how much Netflix spend on its server costs.
Netflix’s Mode of Operation
To estimate how much Netflix spends on its monthly/yearly server costs, it is important to understand how the company operates.
Netflix began operations as a movie rental platform associated with physical DVD and Blu-ray. Today it is hard to think of it as anything other than a streaming platform.
Thanks to its model of operation, it is able to focus on allocating more resources to movie production and other operations by significantly cutting server costs through its use of Amazon’s AWS cloud storage, bulk order, and its own CDN.
It is worth noting that AWS’s parent company, Amazon, is also a direct competition to Netflix in the movie streaming Industry.
So How Much Does Netflix Spend on Server Costs?
Estimating the amount of money that Netflix spends on server costs, as mentioned earlier, is mostly based on speculation, and has a long-winded version of the answer, and a shorter, straight-to-the-point one.
The shorter, straight-to-the-point version of the answer is that Netflix spends nothing short of 9.6 million dollars per month on AWS. Now this might seem like a lot of money, but it is worth noting that this is actually very cheap for Netflix, and in other circumstances it is quite possible it could have cost a lot more.
The company has in systems and properties in place that ensure these costs are kept to the possible minimum. We give more details on that below, but essentially most of the AWS costs go towards Amazon EC2, with a few percentages going towards elastic load balancer, coudfront, and other AWS products listed below:
- Redshift – 1 million dollars a month,
- Lamba – 1 million dollars a month,
- S3 – 25 thousand dollars a month,
- Cloudfront – 1 million dollars a month,
- Elastic Load Balancer – 1 million dollars a month,
- Route 53 – 313 thousand dollars a month.
N.B: All figures are rough estimates obtained from Intricately (https://intricately.com)
Apart from the AWS services costs, we found that Netflix pays a significant amount on other cloud services, such as an additional 1 million dollars a month – or a little bit more – on Microsoft Azure, Akamai, and possibly Heroku.
As mentioned earlier, most of Netflix’s server costs goes towards EC2 instances. One of the major reasons the overall cost is significantly lowered, is due to the fact that Netflix actively works towards keeping bandwidth costs to a minimum.
Bandwidth is obviously one of the most expensive items of an AWS subscription, and Netflix manages to reduce this significantly by having their own CDN, which gives them the benefit of a more optimal performance, and a significant reduction in cost.