Netflix zones

A few points on the threatened Netflix crackdown on geounblocking:

1. Whether Netflix turns a blind eye to geounblockers is a matter for them to discuss with the content producers selling them the licenses for different regions. It is totally fine for Netflix to check whether its users are breaking the terms of their licenses and to decide whether to enforce those terms. It would be not fine for the government to force them to do so, as it's just parallel importation. But this isn't that.
2. In deciding whether to go hard, Netflix will have to weigh:
1. The costs imposed on legitimate users who travel and whose family activity will look a lot like geounblocking - you're on business in the UK; family's home in the US;
2. The losses from those who, like me, would unsubscribe from Netflix entirely if restricted to the content available to NZ subscribers;
3. Its position with its rights-holders;
4. Whether it is actually possible to hit VPN users and how far they really want to go: threatening account cancellation for those whose primary viewing country doesn't match the credit card might be effective for a lot of users who'd have a tough time sourcing US-based cards.
3. On the customer side, those who VPN might need to be a bit more careful and stick with one country's content for a while until we see what they're actually doing. No more flitting over to the UK for more episodes of The Thick of It, then back to the US for other stuff.
4. On the NZ government's side, they might consider whether New Zealand's doing something particularly stupid in requiring that streaming providers get NZ classification labels for streaming video. Netflix has a ton of long-tail content. The fixed costs of getting NZ labels for each title could well be unduly shortening that tail.

The Censor's Office made a big deal of that they can classify things quickly and under urgency to meet international schedules. But look at this:

Working in close cooperation with the Film and Video Labelling Body and Netflix, the Office processed these submissions from Netflix rapidly. The submitter was organised, all material was able to be viewed and they provided clear information about their commercial priorities. The total regulatory cost for Netflix of establishing themselves as a fully compliant, responsible provider of on demand video to New Zealanders was less than $150,000. 

Ok. Netflix is $10/month for the basic package in New Zealand. A customer generates $120/year in revenue. So Netflix needed over a thousand customers just to cover the regulatory compliance costs of getting the NZ-specific labels. And Netflix, here, has about a third of the tv shows as are available in the US and about a third of the movies. I don't know how much of that is rights issues, and how much of it is costs of getting labels on oddball long-tail content. The OFLC cites classification costs of $1124.40 per title. So, for anything that isn't already NZ-rated, Netflix would have to expect that the title would draw in ten more NZ annual subscriptions to recoup that cost.

Note further that this will hit smaller NZ operators like QuickFlix or Lightbox even harder: they then either lag Netflix in content, or front-foot the regulatory costs per title over (presumably) smaller subscriber bases with others then able to coat-tail.

Wouldn't it make more sense to require that streaming content providers provide the country-of-origin's rating for content, and a link to an equivalences table for those who want to know what different countries' classifications mean? The OFLC even provides one, right here. Instead of on-demand streamers having to sort out classifications for each title in New Zealand, they'd just need a couple links on the homepage. And remember: those who want more stringent censorship can always get it by subscribing to Family First's new service.

In irony watch: I also subscribe to UK's NowTV, a Sky subsidiary, via geounblocking.

Chris Keall's piece at NBR is worth reading, as is the Stuff piece on whether the crackdown is feasible.