30 Jul 2014

Why Netflix Australia might not be worth it

Netflix is rumoured to be setting up shop in Australia next year. That in itself is good news, but it might not be quite the service that has seen it become a staple in American households.

Netflix still needs to engage with the content owners for each region in which it offers its service. These licensing requirements mean there is every chance the Australian flavour of Netflix will be different to the American one. If one of the local TV networks – be that free-to-air or Foxtel – has paid for exclusive rights to a TV special or series in Australia, then Netflix in Australia won’t be offering it, even if it’s available on the US service.

You only need to take a look at some of the rival Netflix services in Australia – QuickFlix and Foxtel’s own Presto, for instance, to realise how difficult it must be to create a service with an equivalent amount of content in Australia as Netflix enjoys in the US.

Even more challenging for a local edition of Netflix will be original content creation. In the US, the sheer number of customers that have signed up for their $7/month service has given Netflix the revenue it needs to produce programs such as House of Cards that has become one of the most compelling reasons to be a Netflix customer and established the company as a force to be reckoned with in broadcasting.

But at $7/ customer, the tiny population in Australia makes such investments in original programming unviable. You’d need nearly 70,000 paying customers to produce a single hour of drama content in Australia (http://www.tvtonight.com.au/2013/06/news-and-current-affairs-the-economic-choice.html), and if you’re going to get into original programming, you’re going to need many, many hours of content. Netflix in the US can do this because it has the equivalent of the entire population of Australia as customers.

And, of course, if Netflix were to charge more for its service to try and hit minimum revenue levels to start producing local content, it’s simply going to encourage people to continue pirating content from overseas, rather than bother signing up.

And so Netflix in Australia might not be the great thing that it’s being hyped up to be. Instead, you may want to join the reported 200,000 Australians already signed up to the American Netflix service (http://www.gizmodo.com.au/2014/07/how-netflix-is-doing-in-australia-two-stats-that-should-scare-foxtel-and-quickflix/).

The idea of circumventing Geoblocking sounds like a technical process to many, but over the years there have been consumer-friendly services that have popped up. For instance, the Unblock-Us (http://www.unblock-us.com/)  service is a cheap VPN service that can be used to then sign up to Netflix and access it on all devices (including iPads and game consoles) for a total of $13/ month; slightly more than what the Americans pay, but still great value in comparison to Australian services.