Netflix Moves Into the Cloud With Amazon Web Services

Netflix (s NFLX) is expanding its use of cloud infrastructure, moving some of its customer-facing and back-end operations onto Amazon (s AMZN) Web Services (AWS). After using AWS for more than a year, a number of the most visible portions of its website — including member movie lists, Netflix search and the site’s recommendation engine — now leverage Amazon’s cloud infrastructure to make them work.

Perhaps more importantly, Netflix is using Amazon’s Elastic Compute Cloud (EC2) and Simple Storage Service (S3) for the transcoding and storage of its growing library of streaming video content. Netflix now has more than 17,000 titles on its Watch Instantly online video service, and has been rapidly increasing both the amount of content that is available, as well as the number of consumer electronics devices on which those videos can be watched.

Netflix has been making deals with Hollywood studios like Warner Bros. (s TWX), 20th Century Fox (s NWS) and Universal Studios that have helped it add more movies and TV shows to the streaming service, in exchange for a 28-day window before it makes new releases available as part of its DVD-by-mail program. While users may have to wait a little bit longer for their DVDs, the addition of new content is driving more adoption for the Watch Instantly service, as 55 percent of Netflix subscribers streamed videos in the first quarter of 2010, compared to just 36 percent a year earlier.

The growing number of consumer electronics devices through which subscribers can access the streaming service is also helping to drive adoption. Netflix expects to have it available on more than 100 different consumer electronics devices by the end of the year, including all three major gaming consoles, the Apple (s aapl) iPad, TiVo (s tivo) DVRs, Roku broadband set-top boxes and a number of Blu-ray players and HD TVs from CE manufacturers like LG, Samsung, Sony (S sne) and Vizio. Each of those devices requires a different encoding and file format, which means that for each new device or each new piece of content, Netflix will rely on Amazon to transcode and store the vast — and growing — amount of digital files needed.

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