Streaming In Australia: Range And Regions Mean We're Rooted

Everyone agrees that a service which gives Australians the ability to pay a low fixed monthly fee to watch a huge range of TV shows and movies would be popular. Many people appear to believe an Australian version of Netflix would solve that problem. However, the brutal reality right now is that we're never going to get the features or range or price most people want, we're going to do nothing but complain about the options we already can get, and the companies providing those services are going to struggle to gain traction or turn a profit. Here's why.

Picture: Gareth Cattermole/Getty Images

This problem became very evident in the discussions following our posting yesterday of an infographic from CHOICE comparing the options available to Australians for streaming media services. Here it is again, examining three choices: Netflix in the US, Quickflix in Australia, and Foxtel in Australia:

As we noted yesterday, the first problem with this chart is that it really doesn't compare like with like. $7.99 from Netflix gets you nothing but streaming shows; $14.99 from Quickflix also gets you streaming and a DVD postage deal; and $72 from Foxtel includes a stack of live sporting broadcasts and a lot of channels. We know that sport tends to be the main driver for pay TV takeup, which makes the comparison even more dubious. We're not disputing that many people would prefer to pay less for a streaming-only option from Quickflix, but that doesn't justify comparing entirely separate products and pretending the more limited one is better value.

The second evident source of bias in this chart is that it lists nothing but US shows. It really shouldn't be surprising that a US-based service has better access to American programming than Australian businesses, and it ignores the reality that Australian content remains the most popular choice on Australian TV. (As it happens, the range of streaming Australian content on Quickflix is also pretty poor, and a lack of local content is likely to be an issue if Netflix itself ever launches in Australia, a point we'll return to.)

The third problem is that two of the shows which are included (House Of Cards and the fourth series of Arrested Development) were Netflix exclusives, developed by the channel itself. Had CHOICE focused on content from HBO, it might well have found the reverse result: Quickflix has an exclusive deal for HBO programming, while Netflix doesn't. (The CEO of Quickflix has just returned from overseas having apparently signed up more programming deals; we'll be interested to see what emerges there).

Finally, it seems worth pointing out that while Quickflix is the most visible Netflix-like service in Australia, it isn't the only one dabbling in the general area. You can also choose Fetch TV, offered by a range of ISPs, the Foxtel Xbox service, and the BBC iPlayer iOS apps. (By the same token, Netflix isn't the only game in town for US subscribers; Amazon's offering is arguably the most visible.)

Having said all this, the biggest criticism of streaming services tends to be that they simply don't have enough shows. If you can't find the programming you want on a given service, you're going to complain. Guess what? You'll be complaining for all eternity.

No legal service — not Netflix, not Quickflix, not a local version of Hulu, not any future version we haven't seen yet — is going to have everything. No-one is going to want to pay to license all that content, or have the energy to line up all those separate deals. Choices will be made, and some of us will end up seeing that gap — whether it's Doctor Who or Offspring — as an excuse to stick with downloading without paying, or using a VPN to access a service from a different region.

What It Costs To Make TV

The main reason for this problem, as we've pointed out on Lifehacker on multiple occasions, is that movies and television remain a regionalised business. Producers typically license work to a specific country or region, and part of the reason they can demand reasonable fees for those rights is the promise that a competitor in the same region won't get hold of the same content.

If someone can watch a show as part of a $7.99 bundle, the odds of a TV broadcaster paying large sums for the same content after that point are reduced very much, often to the point of zero. This may seem like irrational behaviour given how easily we can all pirate and share the same content anyway, but the fact that there's an easy illegal workaround doesn't automatically create a viable business model. If the networks don't want to pay to make the show, right now the show almost certainly won't get made, and that won't change in the foreseeable future.

Making television and movies is extremely expensive. Producing an hour of Australian drama costs around $550,000 (and that average figure is lowered through the inclusion of soaps such as Home & Away and Neighbours). It's hard to see how that would be remotely viable if the key source of revenue was fees from a Netflix-style service.

Right now, Netflix has roughly 30 million US subscribers — let's call it 10 per cent of the US population. If we assumed a similar proportion of Australians (which is way above Quickflix's current subscriber base of around 113,000 paying customers), there would be 2.3 million subscribers. If we imagined each one paid $8 a month (the Netflix figure and the one CHOICE seems to be suggesting as reasonable), that would give Quickflix a total income of $220 million.

Sounds like a lot, doesn't it? But if that was dedicated to production, it would still only cover 440 hours of television. The average Australian watches almost three times as much TV as that in the course of the year (according to the Australian Multi-Screen Report). And of course the vast majority of that income can't go towards producing new content: licensing existing content and operational costs have to be covered. In reality, you'd be lucky to score a tenth of that money.

In the absence of a service that's truly globe-straddling, no-one can afford to abandon the old model. But the old model is shedding viewers, who want more choice and don't expect to pay much (if anything) for the privilege.

Even if there is a service that is truly globe-straddling — say Netflix launches around the world and secures global licensing deals — it's hard to imagine it funding Australian content the way it has funded US content such as House Of Cards. Your big issue might be the inability to watch Arrested Development, but far more Aussies are likely to want to watch Packed To The Rafters. Don't expect Netflix to be funding a future revival of that show — and we haven't even thought about sport in this argument.

There's no obvious solution to any of this, and there's no denying that consumers want convenience, whether by legal or illegal means. But arguing about it in a "I should be able to watch absolutely anything I want and pay $10 a month" is just blindly ignorant of the realities of production economics.


Comments

    Also.. Netflix is slowly becoming a shell of what it once was with networks starting up their own streaming services (Show Time for example has pulled it's renewing contract with Netflix on many of its shows, Dexter included, and is now exclusive to its own streaming and US Cable TV). Many of the shows and movies you might expect to get on Netflix are now only available either on other streaming sites or via the similar DVD rental solution that Quickflix is offering, which is not convenient at all (by a long stretch).

    I am also very interested in seeing what new deals Quickflix has made too.. and what is stopping them from getting more content in general. It does seem however that Quickflix is quickly catching up to Netflix whether by its own doing or because Netflix is losing a lot of on-demand content.

    One question I have for the people (and Lifehacker) is with regards to Amazon Prime. With Netflix and Hulu, we can stream if we have a VPN or some kind of geo-unlocking thingy.. has anyone had any success doing the same thing in regards to Amazon Prime? Amazon Prime now have an exclusive contract for "Under the Dome" for example and it's only a matter of time before they gobble up more and more exclusive contracts.

    Last edited 04/07/13 11:29 am

      Up until recently, I was a quickflix subscriber for about a year or so. When I had my service disconnected they said that because i never used their Dvd rental service, I could just go on their "Streaming Only" subscription, which is only $7.95 per month.
      I'm sure if any new customers ask for it then they will certainly put them on it.

      I've been on US VPN since Jan 2011. Just tried signing up to Amazon Prime and looks like they will accept my card payment for a 30 day trial and then $79/yr. From my experience, if the payment is accepted then there would be zero issues in streaming content off the service. The only issue I have seen till date is with HBOgo which asks you to register under your (US) ISP to avail the service for free (for some) or for a charge.

    I wrote a blog post recently about a possible way forward.
    http://blog.pananda.com.au/2013/06/03/the-next-business-model-for-tv-series/

    The bottom line is Netflix, with some adjustments, paves the way for a workable business model that makes everyone happy. But we'll have to pay a little more. I don't think people will have a problem with that, once the user experience matches the asking price.

      Nope.. I wouldn't mind paying what Quickflix is asking if they have as much as Netflix currently has and as per my previous post, they don't have everything..

    This article seems odd. The comparison isn't apples to apples - but there is no equivalent service. The infographic is a reasonable attempt to show a genuine price disparity.

    I'd be happy to be able to use Netflix with it's current catalogue legally in Australia for $10/month. I'd be OK with getting my local content from another avenue.

      Well then, you're in luck, because using Netflix in Australia is perfectly legal.

        Right. It is Netflix that is guilty of copyright infringement when you do that.

        They have acquired licenses to stream content to people within a given geographic area (presumably because the creator thinks it will make it easier to sell the content to local distributors here), and you're outside of that area. Without a license to stream the content to you, they're infringing the creator's copyright.

    If Australian TV is so popular, why are the figures for pirating shows from the US so high?

    When I moved to Australia, my fellow Poms told me how awful Australian tv was. While I don't agree with them that it is ALL awful, I do think that Aussie tv is, in general, pretty crappy. Some of that is taste driven (Pack to the Rafters? Underbelly? Really? Both drivel...), some of it is because the channels themselves treat both their content and consumers like crap.

    Plenty of crap on TV in the UK and US too, but in the UK at least I think the channels treated content and consumers better. Channels in the UK miraculously manage to run to their own schedules... how can Aussie channels seriously not handle simple schedule management?

    I've just heard that Visa and mastercard might start blocking payments to VPN services. They've already blocked one European provider (iPredator)... however it's not certain yet whether that was due to something else or whether it is the first of many blocks.

      That'd be bold and useless considering you can just move money to your paypal account and pay through that.

        Actually I read the same thing but PayPal was included in that list.

          Yup.. Paypal also blocking these.. further to this though, iPredator was setup by the original guy behind Pirate Bay so it may have something to do with it.

    Obviously the CHOICE infographic was targeted at people who want what Netflix provides. It compares Netflix with possible alternatives in Australia - if you want Netflix here, the best you can do is Foxtel and/or Quckflix, where you will pay more (whether that's because you get physical discs or also live sport, or for some other reason - the why is not important), and still not be able to cover all of Netflix.

    That was the point. It was NOT to say "Netflix is better than Foxel".

    As for the "2.3 million people paying $8 each, which totals 440 hours of TV", that is an atrocious analysis. You could make the same argument about a single US state: "It's not worth providing Netflix to Texas because their population alone isn't enough to support all that content!"

    That is absolutely nonsensical. Our 2.3 million would simply go into the US pool of 30 million, and make it a pool of 32.3 million all paying for the content that currently has 30 million people paying for it.

    Absolutely no problem there.

      ^ X infinity

      You can't say "only 440 hours of content", unless we are the only place in the entire world making and using said content, which of course is the stupidest thing I've ever heard. In actuality adding the 2 mil to the 30 million subscribers would drastically alter the income into the 3 billion or more range and even higher if other places where included.

      This asinine comparison also completely neglects the fact that while only 10% of america uses said service another 40-50% (made up number) are still watching via normal means so there is much more revenue there and then on top of this is DVD and Bluray sales which for good shows number well into the millions EACH.

      The sheer number of fallacies in this article is astounding.

    If Quickflix had an Xbox 360 UI worth using, I would have continued my subscription with them.

    ABC iView on Xbox 360 seems to be the interface to beat IMHO.

      Unfortunately Netflix on Xbox is fairly awful, I have to keep switching over to my PS3 for a decent Netflix interface.

    In our house 90% of what is watched in the lounge room is streamed.

    I have Netflix and Quickflix streaming on my Xbox, and PS3. Unfortunately, the main device on the Tv is Android and quickflix only support Android on Samsung devices. Quickflix haven't updated either consoles app since launch and both suck!

    Also have PlayOn to stream Hulu and other streaming sources deemed no available to us, passing the files via the PC to either console,or android.

    When looking for Australian content, Netflix actually has a great collection of local films and Hulu does have TV shows from our major networks (although most is not what I would watch).

    Was going to keep Quickflix only for supporting the local provider, but can't see it continuing too much longer...

    I have sent an email to President Obama at the White House and explained that now that we have US marines stationed in Australia, our country needs to be given access to Netflix so that the US marines can use it, and so can Aussies.

    Anyone else wishing to express this wish just need to go online and do the same.

    The demand for local content is not there. Drama is so high because the the quality is on average fairly poor. Thus, if you want to buy it physically it costs the equivalent of a hard to find foreign film on eBay.

    And Netflix has 'quality' local content such as Underbelly and a few others I have noticed in the deep back log. Which I find astounding.

    Frankly, I wouldn't be overly disappointed if we lost Neighbours and "People cooking/dancing/building".
    It seems to me that the only things worth watching are lower budget shows on ABC/SBS. Wilfred anyone?

    I have had Netflix streaming through my Sony Bravia for the last year. It's a good service for the price, but even in that time some big titles have dropped off. Also the movie selection is horrendously bad. When I add it up it costs me around $20 per month (Netflix + Unblock US + a Static IP because my ADSL drops out frequently) so I am starting to think I may be better off just buying a HTTP.

    I have zero interest in watching Packed to the Rafters, and have been streaming the crap out of Netflix and Hulu for the past month since I got an Unblock-US account. I've had Foxtel on Xbox, it might be cheaper than satellite foxtel but it's even bloody worse, less on and frequent streaming blackouts, not to mention nearly everything is a bloody repeat.

    My issue is that it takes so long for Australian stations to show a US show and then to keep it at a regular time. At least with foxtel we get some US shows up to date not having to wait months to see a series and then it gets shafted to a late night time slot or the channel gets changed without warning. I am happy to pay for these shows I just want to be able to access them easily.

    Just a tip Getflix streaming seems to be a lot better than unblockus and is cheaper
    You can join netflix and other sites at www.getflix.com.au

    Streaming TV is pretty well all we watch in our house I even have it in my shed via wifi
    A Samsung wireless bluray is all you need to get things happening if you dont have a smart TV
    Also the Samsung bluray has PLEX which is awesome when you get it sorted

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