New research by CHOICE suggests that 340,000 Australian households are already paying to access the US version of Netflix. What will happen to those customers when Netflix officially launches in Australia next year?
Picture: Getty Images/D Dipasupil
CHOICE's figure is the highest estimate we've seen so far for the number of local Netflix users. It's based on a sample of 1046 people, weighted to match census profiles. Netflix was by far the most popular choice of the 684,000 households which the survey suggests access some form of legal content from overseas (other options include Hulu and non-Australian iTunes stores).
Paying to access Netflix from overseas is a minor hassle, since you'll need a VPN to get around Netflix's geoblocking, and you'll often have to pay an additional monthly fee as well. But that clearly isn't dissuading many of us.
So the question remains: what will happen to those customers once Netflix is officially available in Australia? The scenario many people are hoping for is that nothing changes and they can still continue paying for a US subscription.
We imagine many people would prefer to keep paying for the US version, since it's clear that Netflix Australia won't have exactly the same range of content on offer. In many cases, existing rights deals with Foxtel and local TV networks will mean Netflix won't be allowed to offer some movies and shows, even if it does so in the US.
That could even be the case for shows Netflix produces itself. While it appears to have stopped selling the rights for House Of Cards to Foxtel, for instance, Orange Is The New Black may well still be on Foxtel first.
However, it seems rather unlikely that Netflix will simply ignore those customers. On the most venal level, we're expecting Netflix to charge a little more than the $US7.99 a month Americans pay. Why would it willingly give up extra revenue? It's a business, not a public service.
Netflix will also be under pressure from content creators to honour its deals. Right now it's possible to argue that it's better for Netflix to turn a blind eye to Australian customers and let them sign up, since that still means people are paying something for content. That becomes more complicated when those customers could be paying the official local service, and doubly so if programs that are on Netflix in the US end up on Quickflix or Stan here in Australia.
So how might Netflix go about identifying Australian customers? The most obvious approach would be to identify customers paying with an Australian credit card — a simple matter given their payment address will be on record — and then suggesting to them that they should migrate to the Australian plan instead. After a grace period, they might be shifted automatically, or have their account cut off.
Viewers could be better off in some ways with a local service. Not having to pay for a VPN service could mean your total expenditure on Netflix is cheaper, even if the local rate is higher. Performance is also likely to improve — using a VPN often slows streaming services down. The question will be whether the range of titles is broad enough for people to feel happy with that change.
We did ask Netflix itself what its plans were for its existing Australian customers, but it declined to comment. Chances are we won't know exactly what's going to happen until after launch date. But it would be risky to assume if you're already a Netflix customer that nothing is going to change.