Building Netflix Australia: How Netflix Is Gearing Up For The Land Down Under

March 24. That’s the day Australia can stop pining and start enjoying Netflix without the use of a VPN or hacked connection. But how did we get here? How did the boffins at Los Gatos — where Netflix is based — turn on the Australian region? It’s more than just the flick of a switch, so to find out exactly what’s involved, we went to the heart of Silicon Valley in California to discover how Netflix Australia was built.

Socket To Me

“It’s relatively straightforward,” says Neil Hunt in his charming British accent. That might be easy for Netflix’s chief product officer to say, but there’s actually a lot of work to get done in a short amount of time. Neil and his team are like US Navy SEAL teams, but for tech: the crack experts who probe a country for problems before Netflix launches, and come up with ways to jump over whatever hurdles may present themselves in the process.

Neil breaks the job of launching a new region down into a few different categories: “There are the challenges of new catalogues, new payment vehicles and bank relationships, and then of course the Open Connect team has been working to secure the appropriate connectivity to the ISPs and that’s looking very good [in Australia],” he explains.

Open Connect is a program that sees Netflix team up with ISPs around the world to more efficiently deliver streaming content to viewers over DSL connections. Netflix partners with hundreds of ISPs around the world to route traffic more efficiently, and embeds “Open Connect Appliances” at different locations and landing points around the world to boost connectivity with its massive content delivery network.

It needs boxes like the one pictured above to deal with the massive traffic load. According to recent stats, over one-third of the peak internet traffic in North America can be attributed to Netflix, so it has to have a network geared to keep up.

That box does more than just handle traffic, however.

The company will gladly put a box with a copy of itself — which is to say, nearly the entire catalog of its offerings — inside your friendly neighbourhood ISP data centre. That way, when your whole neighbourhood is sitting down to watch Netflix after work, it doesn’t tax the internet at large, or the hand-off points between different parts of the network. Instead, the deluge of data is confined to the “last mile”, that last chunk of network between the local data centre and your cul de sac. It saves everyone a lot of headache, in the US at least.

Think of it like Netflix to the node.

Neil wouldn’t tell me who the Open Connect partners are in Australia just yet, but did say that work was well underway with local partners to keep the experience speedy. (We’ve since learned that iiNet and Optus are partnering with Netflix to offer unmetered access to Netflix content.)

Australia will be streaming its content locally through these Open Connect partners, while core sign-ups and other back-end requirements will be delivered through Amazon Web Services in the US.

Despite the fact that all we do in Australia is complain about slow internet, Netflix is positively beaming about the quality of Australian infrastructure thanks to some clever streaming algorithms and lessons learned in other markets with appalling connectivity.

“Slow internet has always been a challenge. We have slow internet in the US as well. Everywhere else in the world, DSL works a whole lot better than it does here in the US,” Neil Hunt says with a wry smile. “Conversely though, we also have some of the highest [speeds] though like Google Fiber and some other providers’ cable connections are very good. The performance is varied, so we spent a lot of time getting [dynamic streaming] right.”

Hunt explains that because the information being streamed live and real time, the company can find a way to pass three streams at once to a customer.

“Netflix is unlike a phone call or a video conference, it doesn’t have to be continuous and uninterrupted. We can build a buffer of two to three to five minutes, deplete that and then build it up again, and we’ve put a lot of energy into the algorithms to be predictive.

“For example, we know a sample connection is delivering a 2Mbps throughput continuously. That’s typical for a DSL. With that we can deliver a very nice 1.5Mbps standard definition, DVD-quality picture and it’s all encoded in a variable bitrate. But on someone else’s connection like a Fixed Wireless connection where there are peaks [of bandwidth] and then gaps with nothing at all, we can know to be more conservative and have more headroom on that connection with the upcoming peaks.

“Latin America is a region, for example, that’s a lot more challenging than the Australian market. Lots of very distributed, poorly performing infrastructure. There’s lots of room to improve there but I have no concerns about the Australian market,” he says as he confidently leans back in his chair, knowing that all of this has happened before, and all of it will happen again.

“It’s relatively straightforward,” says Neil Hunt in his charming British accent. That might be easy for Netflix’s chief product officer to say, but there’s actually a lot of work to get done in a short amount of time.

As we spoke, Neil’s team was working hard to put an historic region into play, in the form of Netflix’s entry into Cuba. Cuba is a country locked in the past following the US trade embargo. Now in the winter of his Presidency, US President Barack Obama is looking to bring Cuba back towards the US. Netflix saw the opportunity to launch there, and did so a few days after this interview was conducted. I spoke to Neil again about the challenges when Cuba finally launched and how easy it makes building Netflix Australia in comparison.

“When we built out our service to launch in Cuba, it took us one week to build. We had to set up a new catalogue and set up some rights. [By comparison] in New Zealand and Australia we have to set up bank relationships so that takes a bit of time, maybe a month or two,” he adds.

It’s Neil’s job to solve any and all problems that get thrown up in front of Netflix on its way to launch. It announced the decision to go global this year, which is massive for everyone who works there. You see the challenge in their faces when you ask them about it.

Netflix is a company that gets its own way, and you can see that in the way that everyone in the HQ bloody-mindedly pursues the company’s agenda. When Netflix first came down to Australia and we spoke to content and marketing staffers, we asked them what happens if there’s an unexpected delay to the March launch which would force them to push it into April.

“It won’t happen. We will launch in March,” one of the staffers told us. It’s like every single one of them has Dr Ian Malcolm in their heads on a treadmill chanting “life finds a way”. And that’s a good thing: a streaming provider tweaking itself endlessly to make the customer happy and keep them streaming awesome new content? Why wouldn’t that be a good thing?

Once Netflix launches, Neil and his team go into maintenance mode. The company starts learning about the customer in order to recommend content to them better.

Make no mistake: Netflix is a technology company before it’s an entertainment company. It may be transitioning into an entertainment company with its Emmy Awards, exclusive deals and star power, but at the end of the day, Netflix is a salad of clever algorithms with a side of user tests running to figure out how to better serve content to a customer.

That’s where Todd Yellin comes in.

Watching Netflix Watching You

Todd Yellin is the VP of Product for Netflix. Everything that “touches” a customer is his responsibility. From the second they sign-up for Netflix and take the quiz asking what sort of movies they like, right through to when they’re binge watching the third season of the award-winning House Of Cards, and everything in-between.

Speaking of House of Cards, Yellin does not look unlike the show’s fierce fixer, Doug Stamper, only with a far less menacing demeanour. He’s whip smart, super-smiley and has been at the company for almost a decade. His fingerprints as well as the fingerprints of his team are all over Netflix. Many of the platform’s key features came straight out of his head.

He was the one who built and maintains the dedicated Kids section that everyone gets access to, and he’s the one who obsesses over metadata. Not the scary metadata George Brandis wants, but the metadata that shows users Funny Romantic Movies or Gritty Action Westerns. It’s this obsession over metadata, user data and test data that keeps the algorithm fresh and recommending new content.

I spoke to Todd a little bit about the user data and how it slowly changes the way Netflix looks, works and serves content to viewers, and right from the word go you can tell he has one of the most fascinating minds of anyone you’ll meet.

“When I first started at Netflix nine years ago, we thought age and gender [were two demographics] that mattered a lot,” he tells me while discussing what happens when users first join up to Netflix. “We used to collect people’s age and people’s gender and we would figure that an older crowd would be into one thing while we’d throw stuff like action and like Marvel Comic superheroes to 17 year old males.

“Then we learned soon after that it doesn’t really work that way. We stopped using age and gender two years after we launched it. Play one title and we’ll know more about you and gather much more interesting information that we could if we just got your age and gender,” he reveals.

“[A user’s] geographic location is not as important as the type of content they’re passionate about. It’s much more interesting to find out someone’s interested in romantic comedies than to find out that they live in Sydney versus New York City. You might have something more in common with someone 7000 miles away than you do with your next door neighbour 20 metres away,” he said.

Every decision you make about what to watch or what to rate, and more importantly what not to watch, is stored in your user profile.

“What we tried a couple of years ago was giving everyone that profile for themselves. That worked really well so now each accounts gets five profiles, as well as an automatic Kids account,” says Todd.

No two Netflix accounts will look identical, the product-obsessed VP tells me. Everyone likes different things, and Netflix’s algorithm throws up new stuff for every taste.

The key to keeping it all organised and showing where you’re up to is in the Recently Watched bar, and that’s one of the first things customers will see when they log into the service.

Right now Todd is watching The Fall (“I’m trying a few episodes of that”), The Trip To Italy (“I was watching that this morning before work”) and Maron. Both of those are in his Recently Watched, and everything below that row is then personalised based on his profile.

Awards season is always interesting for Netflix, simply because it decides whether or not to push a “Critically Acclaimed” row to users. According to Todd, most people like to think for themselves.

“You might never see a ‘Critically Acclaimed’ row. Only around 20 per cent of people are really into following what critics say. They’re really passionate and really sensitive to it so we give them a ‘Critically Acclaimed’ row, but [for] others we won’t,” Todd says.

Every little feature, button and piece of text has a place in the Yellinistic world of Netflix. When you look at the service, nothing is put there by accident. You can point to anything on the UI and he’ll be able to tell you not only why it is where it is, but also what they’ve tried and failed to replace it with.

“Look at all the images here,” he exclaims, pointing at the rows of titles on Netflix. “We’ve tested it with one image [on a row], we’ve tested it with five. We really want to make it so that we’re picking the right stuff to make it very simple and straightforward. Even little stuff like how many characters we use in synopses and how many words, or how they’re presented. Or the fact that we’re using horizontal images now and not vertical. [These decisions] make it better and easier to choose movies and TV shows,” he said.

“We’ve actually tried pushing the envelope a bit and getting rid of all text. That was a disaster. People do read on the internet, it’s just finding how much,” Yellin adds sheepishly. Something tells me he doesn’t like to be wrong a lot of the time.

All of these insights about what to put where come from Netflix’s obsessive data analytics and consumer research teams, stationed inside its Los Gatos HQ. It’s their job to find out which levers need to be tweaked to get Netflix working better for customers. They’ll do user experience trials, content taste trials and even trials on when, how and where people watch.

When Netflix was in its pre-launch phase in Australia, they sat down face-to-face with Aussie consumers and talked to them about their content habits. A few expressed that Netflix appeared to be too difficult to use, but a quick inspection showed that the same people had hard drives connected to their TVs and home entertainment gadgets, so clearly an on-demand streaming service couldn’t be that tough to fathom.

“There’s particular talent in Australia that isn’t known globally. You guys have exported some amazing actors that we know in Hollywood…Chris Lilley is one. Someone like Chris Lilley when we have that content on Netflix we don’t know it because that’s a particular Australian choice,” Todd Yellin admits.

All these challenges needed to be addressed before the switch could be flicked to bring Netflix to Australia.

Once the service is launched, Netflix starts learning about Australia and what we watch in order to serve us better.

Todd explains:

“When we go to a country, we’ve found its more important to understand if you like really gory action and romantic comedy or sappy romantic comedy or more serious romance, that kind of thing to understand is something we’ve built up in our data and our algorithms for a while now, so launching in Australia it’s not like we’re doing it completely from scratch.

“We’ve learned over a long time what people who like edgy independent content or more global cinema, what they tend to like and what they’ll tend to like after their first play, rather than just start it up cold and start building [new user insights].

“There are some subtleties, however. There’s particular talent in Australia that isn’t known globally. You guys have exported some amazing actors that we know in Hollywood…Chris Lilley is one. Someone like Chris Lilley when we have that content on Netflix we don’t know it because that’s a particular Australian choice. But most stuff — like UK cinema, Hollywood movies and Australian content — we already know. Other stuff we’ll learn quickly.”

Coming Soon…

Like it or not, Netflix is coming to the weird island on the bottom of the Earth, so that the millions of people who screamed for it for months will be happy. In three weeks, Australia will have more decent streaming services than it has had in its history, and we’ll be there to cover it.

Over the next fortnight we’ll bring you exclusive interviews with the CEO of Netflix, Reed Hastings on his thoughts on the NBN and launching in Australia; Netflix’s Chief Content Officer, Ted Sarandos, about Aussie content and changing Netflix from a tech company to an entertainment company; and a look inside the lavish Los Gatos HQ Netflix staffers enjoy.

Eric Limer also contributed to this piece.

Luke Hopewell travelled to Los Gatos as a guest of Netflix.