Netflix will not have local presence as execs stress global platform and content investment
Netflix has revealed some more details around its planned launch in Australia next year, saying it has no plans to base any staff in the country and claiming it has been “more upfront” with information around its plans in Australia and New Zealand than it was in other countries.
However, in a briefing with Mumbrella yesterday Cliff Edwards, Netflix’s director of corporate communications, welcomed the competition from the soon to be launched Stan and Presto Entertainment, but was keen to highlight the investment made by the US-based company.
“Every market we go into we have at least two competitors, we think that’s great for the consumer at the end of the day,” he said. “What it does is it makes everybody to up their game and make changes in their business model, particularly for incumbents.
“It’s not an easy market to get into, a lot of competitors jump in and then pull out because they realise it takes a lot of time and investment. We spent $3.2b this year on content in addition to the $400m we spent on technology.
“Some of the numbers from some of these services are spending not even a fraction of that on both,” he added with a laugh.
Cliff Edwards
The streaming service played down expectations around the launch with senior manager of Originals publicity Lindsay Colker telling Mumbrella day one is intentionally the smallest.
The platform is currently slated to launch in March however there is speculation it could launch at the end of February to coincide with the premiere of season three of Netflix Original series House of Cards.
“Day one of the service is intentionally going to be the smallest and that is because we are looking to see what the viewing patterns and preferences are of people in this market,” she said.
“When we see what people are enjoying watching the most we will be programming and licensing content to meet the needs and desires of people in Australia and New Zealand.”
However it is rumoured it will have a $30m war chest to spend on marketing when it enters the market here, although Edwards was tight lipped on any details around the campaign, saying: “We don’t talk about campaigns at all. That’s all stuff that comes around the launch time, pricing, marketing. That’s when we get really granular. A lot of that is for competitive reasons for every market we go into.
He did confirmed the appointment of Droga5 as creative agency and We Are Social as the social media agency, as revealed by Mumbrella last month, while Pulse Communications is the company’s consumer PR agency.
Edwards said they would be relying on their agencies for local intelligence as they would not be basing any staff in the country full time.
“What happens with us everywhere because we’re cloud services we don’t necessarily need staff in the countries we are in,” he added. “Our head quarters is in Los Gatos (California) and we have offices in Amsterdam and Beverly Hills and that’s pretty much it. We rely a lot on the local populace in the forms of agencies to be our eyes and ears on the ground, we have three here.”
Questions remain on whether House of Cards will show on Netflix Australia
Questions have been raised over whether some of the platform’s most well known originals productions, such as Orange is the New Black and House of Cards, would be available on the Australian version of the platform at launch due to being tied up in contracts with rival Foxtel, the team said there was “no news to share”.
“The studio that produces those shows had the ability to sell the rights to those shows where Netflix was not operational,” Colker said. “Those shows are on Foxtel I believe and we have no news to share.”
The possible absence of those shows, as well as a lack of clarity on the pricing of the service, has led to suggestions Australians using the US service via virtual private networks would not be persuaded to switch to the local version.
Pocketbook stats on Netflix users in Australia from July 2014 (click to enlarge)
When pressed by Lifehacker on the issue Cliff Edwards was keen to downplay reports of the number of Australians currently using the service, with estimates between 200,000 to 340,000. When asked whether Netflix would block people using VPNs he said: “With VPNs, it’s very hard to track someone down. We say very clearly that VPNs violate the terms of our service, and we believe that people who license content should get paid for it.”
One of the key differentiators for the service is its ability to stream in HD quality, something rival Presto for one is currently “working on”. That has led to concerns over a lack of internet speeds and capacity across Australia, which Edwards was keen to downplay.
“One of the things that Australians and the Kiwis always talk about is the broadband network, how terrible or how great it is,” said Edwards.
“Our software is very specific about sensing exactly what device you’re using and delivering the bandwidth for that device. So if you’re on your iPhone and you want to stream Netflix we know that you’re you’re either on a wifi or a mobile network and we automatically deliver it just in SD.
“Our chief product officer who most people call a chief technology officer, is very comfortable with both markets in being able to deliver Netflix on the road and in homes.
When pressed on the issue being more prevalent in rural areas, Edwards was vague suggesting people are very clever at finding ways around restrictions, before putting the onus back on the telcos.
“What we find happens when services like Netflix, Stan and Presto roll out, there is such a clamour for better service, the telco providers work fast on providing it,” he said.
Whilst neither have revealed their pricing it is thought Stan will cost consumers around $10 a month, with the revamped Presto Entertainment set to announce whether it will stay at its existing $9.99 price point soon.
The Netflix team refused to confirm the price for the service in Australia, with Colker saying “It will be the same tiers, you’ll have the same option as you have in other parts of the world.”
In the US Netflix has a $6.99 per-month option with a single stream (one device at a time) and standard-definition video, a $9.99 monthly option that provides up to three simultaneous HD streams and a third tier around 4K quality, which will also be offered in Australia.
Netflix expects consumers to subscribe to more than one streaming service in an effort to get a wider range of content.
“We’re not going to be the Spotify were we have every single piece of content so what happens is people decide I’m going to have this service and this service and I don’t want that one,” Edwards said.
“That’s how it typically works in every market we’re in. Our job is to make sure we’re the first one you decide you want.”
Colker added: “The differentiator for us is the premium quality content we’re offering, that you can’t find anywhere else.”
On looking to produce a local original series Colker admitted it was an “option”.
“We are always looking to work with the best filmmakers around the world, there’s nothing to report on that right now,” she said. “It’s an option. We’re doing it in other territories.”
Betsy Sund
Betsy Sund, global consumer media relations senior manager, added: “We’re not looking to just check a box.
“Just because we’re launching somewhere doesn’t mean that we’re looking to say if we’re going to Australia we have to have an Australian creative working with us,” she said.
“We’re looking for the best possible storyteller who have a story that can translate, cross borders and be relevant in our 50 different markets.”
The trio were also keen to stress the company was being much more open about its plans in Australia than it had been in other territories it had entered.
“I would say that we’ve been much more upfront about information with Australia and New Zealand then we have been with other countries,” he added.
Sund added the platform also usually does not reveal content until launch.
When quizzed why the Australian and New Zealand market were being treated differently, Edwards said: “Part of is that our CEO has been dying to get down here, he thinks its a natural extension of the markets we’re in.
“It’s a little more fairness, you guys feel like you don’t get a lot of information, people drop in and then back out.”
Miranda Ward
Related:
- Why Nine’s investment in Quickflix will make it harder for Netflix to launch in Australia
- The telco ‘triple play’ wars and not subscription video services will reshape the media landscape
- Presto boss: Netflix in Australia will be an inferior product
- Presto chango: Could free-to-air tie up help Foxtel counter Netflix?
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Just got foxtel on and they lowered the prices
Screwed by them on contract but love the service but expensive
Look forward to Netflix and seeing them in Australia
We have had to much on monopoly
Presto is a suscribution owned by foxtel
Look forward to Netflix hurry up
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