After many years and hundreds of thousands of illegitimate users being on their service Netflix has finally arrived in Australia, much to the delight of Australian’s everywhere. In the short time it’s been available Netflix has already managed to account for 15% of all of iiNet’s traffic a sure sign that many people have wanted their service for some time. However, as expected, the content catalogue is a small subset of what’s available overseas leading many to keep their VPNs and over circumventions in order to get access to the same content people overseas get. On the surface that would appear to be a big issue for Netflix, given the pressure they’ve been under in the past to shut down dirty VPN users, however the CEO of Netflix (Reed Hastings) has revealed that they’re a small issue and his focus is squarely on converting long term pirates to legitimate customers.
In the interview (which is well worth a read in its entirety) Hastings says that VPN users are “a small little asterisk compared to piracy”, and further goes on to say that they’re users who are willing to pay for content but can’t for some reason. The solution to that problem he says for Netflix to “get global” and remove the incentive to use a VPN with their service. Essentially this would boil down to making the whole catalogue available to all users of their service, regardless of their location around the world. Whilst this idea is highly commendable, and demonstrates Hasting’s understanding of how media consumption has changed in the digital age, it’s ultimately doomed to failure given the challenge that they’re up against.
Netflix’s main issue with their catalogue isn’t the ability to deliver it, that’s been a solved issue for them ever since they switched from mailing DVDs to streaming services, it’s always been securing the rights deals to distribute content in certain areas. This is why their current catalogue in Australia is so paltry when compared to the one in the USA as Netflix, lacking a presence in Australia for so long, has been usurped by other distribution partners like Fox. Indeed Netflix even sold the rights to distribution for their flagship series House of Cards to Fox (through Sony) for the first two seasons, although that seems to have been time limited to coincide with their Australian launch.
Therein lies the rub; Netflix’s catalogue can only grow as fast as it can secure rights to distribute content in the countries that it has a presence in. In order to make their catalogue truly global they’d have to secure rights for every show in every region, something I’m sure they’re attempting to do but will run up against the rights holder empires that have cemented themselves in an old-world business model. They could, in theory, make global licensing rights a condition of any show being on their service however most popular shows are either backed by big production houses with distribution rights already in place or the fee required to do so would be so high that Netflix would be unlikely to sign up for it.
Netflix does have the advantage of being the biggest single provider of content across the globe, giving them a little clout in negotiating these content deals, however they’re running up against an empire that’s been extremely resistant to change for the better part of 100 years. They’ve definitely been at the forefront of changing how consumers want their media delivered to them however the lumbering giants that give them the content are steadfast in defending their regionally based business models. I’d honestly love to be proved wrong on this (although I’d still hold onto my VPN for other reasons) but I honestly can’t see a global Netflix in our future.