Beyond geeks and nerds: Understanding Australia's Netflix fixation

Idle speculation on the impact of Netflix misses the point and calling Australian consumers utilising VPN services pirates certainly doesn’t help.

The impact of Netflix on Australian free-to-air networks and Pay TV is a perennial issue that sprouts wings at regular intervals.

If it’s not the impending entry of the US player, it’s the sheer size of the subscribers it’s stealing from the local players.

The idle speculation does fill the pages but unfortunately the bluster doesn’t quite get to the heart of the issue. Labelling the tens of thousands of Australian consumers utilising VPN services to access Netflix and Hulu pirates certainly doesn’t help.

It wasn’t that long ago that VPN usage was seen as fringe behaviour, it’ll never catch on, it’s for the geeks and nerds.

Well, there must be a lot of geeks out there because the latest speculation on how many Australians are accessing Netflix is between 50,000 and 200,000.

The numbers actually aren’t that meaningful but they do highlight a trend.

Consumers are unlikely to sit around and wait for service behind a walled garden, when the future is knocking at the door.

And calling them pirates isn’t necessarily accurate, when they are willing to fork out up to $14 a month to gain access to Netflix through a VPN or proxy service.

The core issue is the disruption in traditional distribution channels, which requires local networks to be far more aggressive with how they price and provide access to content.

Foxtel’s stand-alone streaming service Presto is on example of how an essentially moribund incumbent is leveraging its strength in content to provide a new access platform for consumers.  

Locking in exclusive digital rights is part and parcel of this process but Foxtel’s move to provide Game of Thrones at a cut-price rate should mollify most angry viewers. But let’s be honest, there will be an element that will use torrents to get what they want, without paying a dime.

However, the sometimes acrimonious dynamic between customers and the network does have another major factor, the studios that create a lot of the content we desire.

Studios that would rather have internet service providers police the internet, lock in exclusive distribution deals and for now allow Netflix to turn a blind eye to Australian consumers accessing services via VPNs.

With Netflix still firmly focused on the home market with an eye on Europe, it’s unlikely to come to Australia in a hurry. The reason is simple – it doesn’t need to.

Policing its platform for VPN users adds a layer of complexity and cost that Netflix simply wouldn’t be interested in engaging right now. That may change but for now the likes of HBO and Warner Bros have bigger fish to fry.

For Australian networks, the immediate future is to accept the fact that a certain segment of the market will always choose to take the torrent road, and opt to access Netflix’s extensive content library.  

That allows them to get out of the siege mentality around content piracy and purely focus on devising cost effective distribution platforms and ensure that the deals sealed with the Hollywood studios truly provide bang for buck.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles