Netflix to compete for a slice of New Zealand video-on-demand pie in March, chief censor ready to eyeball its content

Online streaming media service Netflix has announced it’s officially launching in New Zealand and Australia in March 2015, joining a populated online streaming landscape: Spark’s Lightbox, Australian companies Video Ezy and Quickflix and Sky’s Internet television service, Neon, which is launching in December.

The movies, the dramas and all things on-demand are coming to town in droves in what could be an interesting test for local consumers’ appetite for videos streamed online.

Many New Zealanders are believed to be already experiencing the online phenomenon by accessing the US version of the site, which is estimated by Netflixcanadavsusa.blogspot.com to have 8,917 movies and shows available.

Some skeptics think the local Netflix might be a “poor man’s version” compared to the US one and the jury is still out on whether on-demand watching will really fly in the New Zealand market, given the data on consumer reach isn’t overwhelming, although the US loves on-demand big time.

What's certain is that competition is heating up and suppliers will be vying for space in the local marketplace.

Backdoor

Currently Kiwis are able to access Netflix loopholes such as Virtual Private Networks (VPNs) that disguise the user’s IP address or through Slingshot’s controversial Global Mode, which copped flack from the chief censor earlier this month for allowing access to content that hadn’t been classified in New Zealand.

Netflix is tight-lipped about the amount of content on offer to New Zealand subscribers, despite talk of the version launching in New Zealand not measuring up to the US version.

Its director of corporate communications and technology, Cliff Edwards says decisions have been made about the content but they’re not talking about anything yet.

The names of the titles released in the announcement aren’t the frontrunners that would usually come into mind for Netflix, with their original series House Of Cards and Orange Is The New Black being absent from the list.

However, this could be due to TV3 and TVNZ acquiring the programmes earlier this year.

The titles announced for the launch are original series Marco Polo, BoJack Horseman, DreamWorks Animation's All Hail King Julien, as well as documentaries Mission Blue and Virunga, stand-up comedy specials Live, from Chelsea Handler and Uganda Be Kidding Me.

For Marco Polo fans

More titles, such as original series and family thriller Bloodline, Marvel's super hero series Daredevil and thriller series Sense8 will be released later in 2015.

Censorship issues

New Zealand’s chief censor, Andrew Jack, has been vocal about his issue with Slingshot’s Global Mode providing access to online content, such as the Netflix US catalogue, that hasn’t been classified. Speculation is that the chief censor might seek legal recourse against the company.

A spokesperson for the Classification Office, Henry Talbot, says the chief censor has no comment on the Slingshot matter, but the Films, Videos and Publications Classification Act requires Netflix’s content to be labeled for consumers so they can make informed choices about what they watch when it launches.

“The Chief Censor looks forward to working with Netflix to help it meet its obligations to New Zealanders, in accordance with the law,” Talbot says.

Edwards says Netflix follows all applicable laws in every country where it’s launched.

“Our content team will take a look to ensure to see nothing is going to be released that would run afoul of censors.”

This could include movies that have been banned by the Classifications Office in New Zealand, such as The Human Centipede II and Maniac.

Spark spent about $250,000 on its product Lightbox to gain censorship compliance for its contents.

Netflix’s rise in power

Netflix was founded in 1997 and had humble origins, starting out as an online movie rental company that used the US Post to deliver movies to customers.

It expanded into an online streaming media service in 2007 and now has 53 million subscribers worldwide that watch two billion hours of TV shows and movies per month.

It was a pioneer in making a TV programme’s entire season available to watch at once instead of the traditional week-by-week technique, popularizing the term ‘binge watching’ and in being the first original online-only content creator, as well as the only online content creator to win an Emmy award.

In 2013, Netflix’s annual revenue was US$4.37 billion (NZ$5.56b), up from $150,800 in 2002.

A study by Canadian broadband company Sandvine found that Netflix accounts for 35% of bandwidth usage in North America, with the next highest video streaming service, YouTube, accounting for 14%.

The current video-on-demand landscape

A 2014 Colmar Brunton survey researching New Zealanders’ media consumption reported that Netflix is the most commonly used overseas TV site accessed by a VPN, making up 31% of the daily reach.

However, the results found it achieves less than 2% of a daily reach from audiences, showing that viewing TV on an overseas site is still not common in New Zealand when compared to traditional TV.

This number can only to be expected to rise as more companies jostle for the prime position in the New Zealand online streaming landscape.

Spark's Lightbox

Despite Netflix’s New Zealand launch being possibly problematic for Slingshot’s Global Mode service, as providing access to the site is one of the main draw cards for customers, Slingshot general manager Taryn Hamilton has released a statement saying it’s great that Netflix is launching in New Zealand.

“When we opened up Global Mode to all of our customers earlier this year it was because we wanted to give Kiwis the chance to have access to the same online content – for the same price – that people in other parts of the world have access to,” she says.

“We hope that kiwis get as good a quality line-up of content and at a comparable price point to what US Netflix users enjoy. And we also look forward to more services similar to Netflix coming into the local market as well.” 

Competition rising?

A Netflix US subscription costs US$8.99 per month, which adds up to $107.88 (NZ$137) for one year.

The price for a Netflix subscription in New Zealand has not yet been announced, but current streaming services Lightbox costs NZ$15 per month ($180 a year), Quickflix costs $12.99 per month ($155.88 a year) and Neon, which is launching in December, will cost $20 a month ($240 a year).