Slamming Netflix 'backdoors' shut will not help local streamers

Quickflix and Foxtel are both unhappy about Australians using Netflix via VPNs, but even if Netflix stopped it, there's no indication that those customers would suddenly want to use their services.

"We can't compete against free."

This is the line that is often trotted out in the fight against online copyright infringement. It is not an unreasonable argument to make. Faced with the prospect of competing against piracy, where users get access to content for free, how can a for-profit service that needs to charge customers ever hope to succeed?

It becomes less believable when Australian streaming companies insist that they can't compete with overseas services that Australian customers actually pay for.

Back when everyone still watched DVDs, and online shopping was still a relatively new phenomenon, I routinely imported DVDs from Amazon or other stores for shows and films that either weren't available in Australia because the distribution company hadn't finished flogging that season of the show on free-to-air TV, or were super expensive because they could get away with charging more for it because Australians, mostly, were willing to pay.

The local companies probably weren't very happy about it, but the easily circumvented region coding on DVDs was a security blanket; a way for them to feel like they were doing something, and just continue as though Australian consumers wouldn't notice the delays or disparity in pricing.

For a decent portion of the Australian public, the notion already set in that getting content from overseas was cheaper and faster than waiting for local distributors to play catch-up.

So it feels a bit like history repeating itself with the complaints this week from both Foxtel and Quickflix that Netflix should stop allowing Australians to bypass geoblocks to access the service through virtual private networks.

Last week, Foxtel CEO Richard Freudenstein told ZDNet that content owners had to push Netflix to stop accepting Australian credit cards, because Netflix doesn't own the rights to show that content in Australia. He stated that the US streaming giant is exploiting the rights that Foxtel is paying for.

Then, late last night, Stephen Langsford, the CEO of local DVD-rental-turned-streaming-company Quickflix, joined Freudenstein, penning an open letter (PDF) to Netflix CEO Reed Hastings. He told the company to come to Australia or stop "turning a blind eye" to "unauthorised backdoor access" via VPNs.

The trick being that, should Netflix launch in Australia as rumoured in 2015, due to the local content deals already secured by companies like Quickflix and Foxtel, Netflix would likely have a vastly different, and arguably much smaller content library than it does in the US today.

The popular myth of Netflix being Australia's content saviour with every TV show you would ever want would be quickly dispelled, because it wouldn't live up to the hype.

In the meantime, if Netflix listened to the complaints from Australian companies, and somehow cut off the estimated 200,000 Australian Netflix subscribers, it is optimistic at best to believe that those customers would suddenly see the light and sign up for a Quickflix or Presto subscription.

Leaving aside the debate over whether Netflix access in Australia is legal, those who have signed up for Netflix have already considered the options available to them here, researched, and decided that investing in Netflix and a VPN service is worth their time and money.

If Netflix cuts those people off, they're going to know that it was at the behest of Foxtel and Quickflix, and would likely boycott those services instead of flocking to them. If nothing else, it would encourage those who have tried to do the right thing by subscribing and paying for content on Netflix to return to copyright infringement.

Then, if and when Netflix finally launches in Australia, those users will just resubscribe and go back to using VPNs to access the content that is locked up in the US or UK regions, just as already happens elsewhere in the world today, and happened in the DVD era with region-free DVD players.

Regional distribution windows are a form of old-world trade protectionism that is an anachronism that we are somehow still stuck with for TV and film distribution much longer than most other industries, and longer than we ever should have been. Complaining that consumers don't want to be a part of that anymore is just counter-productive.

Local content players like Quickflix and Foxtel would do far better to turn a blind eye to Australian Netflix users, and instead focus on making their own platforms easy to use, and much more appealing than Netflix.