Netflix isn't using AWS for their bandwidth. The media files themselves are being served by Level 3's CDN (http://www.reuters.com/article/2010/11/11/us-levelthree-idUS...). Netflix is using Amazon for a lot of their application servers, but when you're serving as much bandwidth as Netflix is, you go with a CDN for media distribution.
That's not to say AWS is bad or anything, just that AWS isn't supporting all that bandwidth for Netflix.
That is mostly correct. Most of the traffic is coming from the CDNs. But we also use Akamai and Limelight in addition to Level3.
Thanks for the clarification.
Are the files encrypted before placement on the CDN or does the CDN handle the DRM?
I believe the processing (and probably encryption) is done before the CDN using EC2 or some similar service.
It is highly unlikely AWS can handle that kind of load. AWS may be responsible for the netflix interface, but video streaming (the bulk of the data) is handled by CDNs such as Akamai.