Ok, I've been trying to get help from both Apple and Netflix and neither can help. I think I stumbled onto the problem/solution while trying to fix another issue.
I was getting error code S7353, which Netflix kept saying that they didn't have an error code like that. I could watch Netflix through Opera.
I had tried everything that Netflix and Apple suggested including deleting database files for Netflix, removing and reinstalling Silver-light and several other things to no avail.
Today, i needed to boot into safe-mode. I thought, for the heck of it, I would try to run Netflix on Safari in safe-mode. It immediately showed that I needed to install Silver-light of which I knew I had already done so I thought "this isn't going to help" and continued to reboot my computer in regular boot up.
As soon as I launched Safari, since Netflix was the last page that I was on, Netflix came up, of course, but this time, it popped up a message asking me to TRUST SILVER-LIGHT. I clicked TRUST and it immediately started working. I can now watch Netflix on Safari.
I called Netflix and they immediately said that they are having outages on Safari. I told the girl that answered about my experience and asked her if she would let the engineers know and maybe they can start using that to see if it will help others. She said she was shooting it up to the engineers. I'm kind of doubting it being her response was so quick and she didn't seem to be listening in the first place. I wanted to put her on the spot and ask her what she was going to "shoot up to the engineers", but I decided not to. If this helps, please let me know.
Things I had done:
Deleted Netflix database files for Safari, Reinstalled Silver-Light
booted into safe-mode by shutting down the computer, holding the left shift key and turning on the computer while not letting go of the shift key. (If you are successfully in safe-mode, it will seem like your computer is glitchy as the screen will refresh or flash everytime you do something and trying to watch Netflix show - getting the "Need to Install Silver-Light" message. Shut down computer. Unplugged the power for 1 minute (Its important to actually unplug the power from the computer, not just turn off a power switch or other power supply - MUST unplug power cord from computer)
Plug power cord back in. Boot normally. Immediately launch safari and try to watch Netflix. What you are ultimately trying to do is get the computer to prompt you to trust Silver-Light. I couldn't get it to do this by removing Silver-Light and reinstalling, but then, by doing all of this, it finally prompted for me to TRUST Silver-Light and worked immediately!